Employment Practices and Wage and Hour Coverage—Are You Protected?

Recent proposals to change the floor for exempt versus non-exempt employees has created a new opportunity for lawyers representing groups or forming classes to litigate against employers.

This particular area of exposure falls under the category of Wage and Hour, and has historically been a sublimit throw-in on many Employment Practices Liability Insurance (EPLI) policies.

For employers, it’s important to know the following:

 1. Do you have a separate sublimit for wage and hour claims?

If so, what is it and what does it provide for most policies up until the last two years, provided limited coverage for defense costs only? (Usually that coverage amounted to $100,000 or less)

As all of us know turnover and employment law can be very difficult to stay on top of when you operate multiple locations in several states.

This reality creates a dangerous gap in coverage for most hospitality and restaurant owners. Use of a third-party HR compliance team is not only a good idea, but crucial to making sure your company stays in compliance with federal, state and local employment law.

2. Do you have the right to choose your counsel when dealing with an EPLI or Wage and Hour claim?

Most carriers have “Panel” counsel that operate solely in employment law and agree to a certain fee schedule. If your company has legal counsel on retainer that specializes in employment law, you can request that the carrier review your lawyers credentials to consider allowing you this “Choice of Counsel.” Otherwise, panel counsel would be your representation.

Choice of Counsel is not easily achieved, however, if the broker you’re working with has a solid relationship with the carrier partner, the chances of this being approved are much greater.

3. Does your policy have a per claim and aggregated limit of coverage?

Some carrier partners offer up to $10 million of coverage in this area of exposure which can be important, considering the awards and how quickly the costs mount in any given claim.

Keep in mind, these are just a few of the areas in an EPLI/Wage and Hour policy. Our team conducts a careful and thorough review for our prospective clients as to where they may be vulnerable.

This coverage does come at a price given the recent uptick in litigation around unfair labor practices, violations in the Fair Labor Standards Act as well as  the Immigration Reform Act.

If you have any questions about this topic or you would like to learn more about how you can protect your business from these times of claims, please feel free to contact me.

If you would like to see what is available for your company, and receive some analytics to determine your amount of risk and cost, we would love to review your program and offer alternatives, and solutions.


About Hugh Scott

Hugh Scott has over 20 years of experience insuring hundreds of multi-state, multi-location franchised and non-franchised restaurants across the United States and Canada. As Sr. Vice President with Bolton’s Restaurant practice, Hugh helps clients in this ever-evolving industry review, develop and strategize insurance programs that serve their individual business needs and objectives.

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