Friday, June 11, 2010

Wage and Hour Claims Could Affect Your Business!

Employment Practices Liability is a specialized insurance policy that protects employers against employee claims, including discrimination, harassment and wrongful termination. This coverage has been in the marketplace for the better part of the last 20 years. Companies offer the coverage either as a monoline policy or an endorsement to an existing Liability policy.

EPL policies often exclude coverage for "Wage and Hour" claims brought by employees. Wage and Hour responsibilities are dictated by the Fair Labor Standards Act of 1938.  Examples of such claims include:
  • Failing to pay overtime
  • Paying overtime at regular wage rates
  • Failing to pay minimum wage
  • Failing to provide commission to salespersons
  • Failing to make or delaying payment of an employee's final check
We've recently learned that the Department of Labor has been stepping up its efforts to educate employees about their responsibilities and to penalize employers in violation. The following facts were provided by Professional Liability Insurance Services, Inc.  They are a wholesale broker that we retail agents can approach for specialized coverages.
In April 2010, the Department of Labor launched the "We Can Help" campaign to assist employees in filing these claims.  
The DOL is launching a series of posters, booklets and PSAs to educate workers about their rights.
The DOL has ceased providing "opinion letters" to employers to help them stay in compliance with regulations.
Non-government wage & hour settlements increased 44% in 2009 over 2008.
Is your company at risk for this type of claim?  Here's how to proceed:
  1. Educate yourself about your responsibilities under the law.  DOL FLSA Compliance Assistance
  2. Check your Employment Practices Liability (EPL) policy to see if it excludes Wage & Hour claims.
  3. If it does, talk to your agent about adding the coverage back by endorsement.  This can usually be done for some additional premium.  Whenever there's an exclusion, there's usually a way to buy the coverage back

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