According to Advisen’s new report on Wage and Hour claims and coverage “The Department of Labor estimates that 80 percent of employers are not in compliance with applicable wage and hour laws. The retail sector has been targeted in many of the largest suits – Wal-Mart alone has been named in over 80 wage-and-hour class action civil suits, and has agreed to settlements in the hundreds of millions of dollars – but no sector is immune. Even companies primarily employing salaried professionals have been subject to large class action suits.” Not too surprising, given the complexity of the regulations.
Coverage for Wage and Hour claims is hotly debated amongst EPL insurers, with a number of the leading carriers adamant that this exposure is uninsurable. Never-the-less, there are many carriers that offer some form of coverage (predominantly Defense Only, and often subject to a sublimit; see our EPLI Market Survey December 2009 pages 5,6). The carriers that offer such coverage tend to focus on smaller insureds, where the need for coverage is more compelling and insurable.
I suspect that ongoing competition in this market segment will lead to more carriers offering Wage and Hour defense coverage, and that it may well be insurable, subject to careful underwriting and reasonable limits, for the smaller insured. Defense coverage, but not damages, would seem to be insurable to me. Though there are certainly bad actor employers that use wage classifications to shortchange their employees, there are many more that are out of compliance simply because compliance is far from simple. That’s no excuse, but it may well be insurable.
Congrats to Advisen on taking up this important topic.