A Recent Development in “Wage and Hour” Insurance

May 23, 2013

In our August 1, 2012 blog entry titled “Insurance Coverage for Wage and Hour Litigation Claims,” we discussed the recent surge in wage and hour litigation and the potential for insurance coverage related to wage and hour lawsuits under employment practices liability (“EPL”) and directors and officers (“D&O”) insurance policies.  Therein, we also discussed the availability of specialty policies designed to cover wage and hour claims, as well as potential shortfalls associated with these specialty policies (e.g., coverage only for defense costs and minimal limits).

Apparently recognizing the shortfall of specialty policies available on the market, as well as the uncertainty of coverage for wage and hour claims under EPL and D&O policies, Marsh, offered exclusively through Marsh and its specialist international placement broker Bowring Marsh, has now released a new product – the Marsh Wage and Hour Preferred Solution.  Marsh asserts that this product is designed for companies with more than 4,000 employees to provide coverage for actual or alleged violation of the Fair Labor Standards Act or similar state laws.  Marsh’s marketing materials indicate available limits up to $100 million, a broad definition of “wage and hour wrongful acts,” and a definition of “loss” that includes defense costs, settlements, and judgments.

As indicated in our August 1 posting, as with other specialty policies available on the market, employers should consider whether coverage provided by the Marsh Wage and Hour Preferred Solution product makes sense for their business.  Employers should review proposed policy language, potentially with the assistance of an outside insurance expert.  Finally, employers should preserve, and when necessary, exercise their right to pursue coverage from all potentially responsive policies, including potentially applicable EPL and D&O policies.

Gilbert LLP is a Washington-based law firm specializing in litigation and strategic risk management, insurance recovery and complex dispute resolution.