Wage-and-Hour Policies May Be a Useful Asset to Fill Potential Coverage Gaps

Jared Zola and Frank M. Kaplan

Zola, Jared Kaplan, Frank M.As a wise person once said, “It’s déjà vu all over again.” Anyone who thought wage-and-hour lawsuits would be a short-lived lawsuit du jour of the plaintiffs’ bar have been proven wrong. Claimants filed more than 8,900 FLSA cases in federal court last year, a 30 percent increase from 2011. In light of the continued trend and recent legislation that has the potential to expand liability to individuals acting on an employer’s behalf, employers should take a hard look at the insurance assets available to protect against these potential liabilities.

California’s new statute, the Fair Day’s Pay Act, has the potential to implicate a “person acting on behalf of an employer” to liability for the company’s allegedly improper wage-and-hour practices. Labor Code § 558.1 (eff. Jan. 1, 2016). New York amended its existing Business Corporation Law § 630, effective January 19, 2016, to extend potential liability for unpaid wages to the top 10 shareholders of privately held corporations incorporated in New York and foreign corporations. While employers and individuals are armed with a wide array of defenses, the potential risks warrant a close look at what insurance assets a company has available to offset any potential liabilities in this continuously growing area. Continue reading “Wage-and-Hour Policies May Be a Useful Asset to Fill Potential Coverage Gaps”