EMPLOYMENT PRACTICES LIABILITY
WAGE AND HOUR CLAIMS – IS YOUR BUSINESS PROTECTED?
Wage and hour claims are on the rise in the United States. The U.S. Department of Labor has become more aggressive in enforcing wage and hour laws, and their data suggests that more than 70% of employers are not in full compliance with the Fair Labor Standards Act (FSLA).
Employers must take practical steps to minimize their wage and hour compliance risk – to help avoid costly lawsuits.
What is wage and hour?
In the U.S., there are a group of laws that protect worker’s rights with respect to pay/overtime pay and hours worked.
The Fair Labor Standards Act (FLSA), also known as the federal wage and hour law, regulates minimum wage, overtime, equal pay, recordkeeping, and child labor laws. (Some wage and hour claims are filed under the state labor laws instead of the FSLA because there are differences between state and federal laws.)
Some well-known companies have faced multiple actions and very large class action payouts. A range of organizations, including financial institutions, retail shops, transportation companies, and financial services providers, have experienced payouts in the millions.
The main allegations in these cases involved employees who were forced to work off the clock or deprived of required overtime pay.
Take Action to Minimize Risk
Wage and hour claims do NOT only happen to large companies. It is also important to know that wage and hour coverage is NOT automatically included in a Business Owners policy.
Fortunately, wage and hour coverage can be added to most Employment Practices Liability policies by endorsement.
Most carriers charge an additional premium, and an additional supplemental application has to be completed to obtain coverage. (Some carriers will not offer this coverage for certain business classes.)
The endorsement provides coverage for the cost of defending claims alleging that an employer failed to pay overtime to a non-exempt employee.
A non-exempt employee is eligible to receive overtime pay under the Fair Labor Standards Act (FSLA). Typically, coverage does not apply to settlements or judgments, only defense costs. Most sub-limits range from $50,000 to $150,000.
We encourage you to familiarize yourself with the wage and hour coverage options available, and if you have any questions, the Rockwood team is here to help!
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