Employers could be in for a surprise if they assume their Employment Practices Liability (EPL) insurance policy covers wage and hour claims.
Kimberly Lewis, vice president, professional lines insurance underwriter for Argo Insurance in Bermuda, says EPL policies usually exclude those claims.
“Some companies don’t know (wage and hour) coverage exists,” she says.
The Bermuda market offers the majority of wage and hour insurance products, Lewis explains. Argo Insurance launched its stand-alone wage and hour product in 2017 after recognizing an unmet need in the U.S. small to medium-size enterprise (SME) insurance market, and after an increase in wage and hour claims filed on behalf of U.S. employees.
What wage and hour liability covers
Wage and hour liability insurance covers indemnity and defense costs related to violations of the federal Fair Labor Standards Act, which established standards for minimum wage, overtime pay and child labor in the private and government sectors.
According to Lewis, the most common violations of the FLSA include:
- Failure to pay overtime to nonexempt employees.
- Misclassifying employees as either exempt or independent contractors.
Failure to comply with meal and rest break requirements.
Argo’s niche product for wage and hour indemnity and defense coverage