Wage and Hour Coverage for Not For Profits
What is Wage and Hour (W&H) Coverage? It’s commonly — and incorrectly — assumed that W&H claims are restricted to either misclassification of exempt/nonexempt employment status or failure to pay overtime. However, W&H liability also includes allegations such as underpayment of overtime, not paying overtime, miscalculating wages, refusing breaks, expecting employees to work off the clock, not paying employees regularly, refusing to pay exempt employees for absences and following federal minimum wage guidelines when state guidelines warrant higher pay.
Wage and Hour exposure is an often misunderstood and frequently under-insured risk. Naturally, a business seeking protection from the catastrophic exposure of W&H violations may look into purchasing Employment Practices Liability insurance (EPLI). However, to their dismay, W&H violations are largely excluded in EPL policies. Usually, the carrier can add a Wage and Hour endorsement to the EPL policy. The coverage is sub-limited to $100,000 to $500,000 and only covers defense coverage. No settlements or judgments are covered.
Prevention is always the best line of defense. Therefore, beyond insurance, employers can reduce their risks in a few ways by:
- Assessing the risk within the company, starting with the State and Local Government Self-Assessment Tool from the U. S. Department of Labor’s Wage and Hour Division
- Reviewing exempt/nonexempt employee classifications regularly and update/revise job descriptions
- Enacting policies that prohibit employees from working when off the clock
- Reviewing managerial practices to ensure that supervisors are discouraging work after hours
- Understanding the state wage and hour laws, as well as what changes are happening federally
- Consulting with outside counsel to assist in navigating the wage and hour field
Even if you feel that your organization faces little or no risk of receiving a wage and hour claim, it still pays to complete an application for coverage. If you are already purchasing EPLI coverage, the additional time and effort required to complete a Supplemental Wage and Hour application are minimal.
In addition, simply going through the exercise of answering the questions requires you to look carefully at your company’s payroll and employment practices and home in on possible trouble spots. It’s best to minimize those exposures while you can!
For more information on wage and hour coverage for your organization, contact a member of the ‘A’ Team!
- Understanding Employment Practices Liability Insurance
- Do I Really Need EPLI?
- Mitigating Exposure to Wage and Hour Claims
- Dissecting the Uptick in Wage & Hour Claims
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