More Wage and Hour Litigation Issues are Ahead. Here’s What Business Owners Need to Know.

Businesses are being faced with yet another challenge due to the COVID-19 pandemic – the threat of wage and hour litigation issues. According to the International Risk Management Institute, Inc. (IRMI), these claims are “an assertion by an employee-plaintiff that his or her employer has failed to pay overtime wages owed to the employee.” Even before the pandemic, such claims were increasingly filed on a class action basis, resulting in increased dollar amounts payable. In 2020, a record 231 wage-and-hour-related class action lawsuits were certified with COVID-19 cases making up about one-third, reports USA Today. And this trend expects to continue.

Industries that are especially vulnerable include healthcare, hospitality, restaurants and retail. These employers expect to face class-wide overtime or off-the-clock lawsuits from nonexempt essential workers based on things like required time spent waiting in line for temperature scans, exempt managers who perform a disproportionate amount of nonexempt work (largely due to budget costs who now contend they are nonexempt employees) and healthcare staff working extended shifts.

In addition, a rise in work from home (WFH) has increased the number of nonexempt offsite employees, and it has also increased the number of “off-the-clock” claims from nonexempt employees reports The National Law ReviewRecommendations from a risk management perspective include:

  • Mitigating the risk of wage and hour claims by making sure you have firm policies and timekeeping practices, particularly for a virtual workforce.
  • Making sure that you provide detailed and easily accessible rules for recording time worked.  
  • Setting strict prohibitions against working off the clock without prior approval.

From a business insurance perspective, wage and hour litigation coverage for settlements and judgements is usually not insurable under employment practices liability insurance (EPLI). This is largely due the growing number of high-dollar and high-profile wage and hour claims filed on a class action basis over the past few years, says IRMI. However, we recommend that review your policy to see if you can be reimbursed for legal defense costs relating to wage and hour claims. In some cases, a coverage endorsement may be attached to your EPLI policy for these defense costs only.

If you have any questions about this wage and hour litigation issues, you can always reach out to the team at Rose & Kiernan, Inc. here or by calling (800) 242-4433. Our team has extensive knowledge about the Fair Labor Standards Act (FLSA) and related laws at the state and local levels. We’re following along closely to litigation thus far and issues employers are – and will be – facing. 

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