One of the Largest Exposures Employers face today are Wage and Hour claims
"On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor's final rule updating the overtime regulations, which will automatically extend to over 4 million workers within the first year of implementation." - Department of Labor (DOL) 

What Does this Mean?

Previously, any employee making less than $23,660 a year and working more than 40 hours per-week was eligible for time-and-a-half overtime compensation. The new overtime rule has increased the minimum salary required for overtime pay from $23,660 to $47,476, or from $455 to $913 per week. The final rule will be enforced starting on December 1, 2016.

How Does this Impact Employers?

Scott Green, a partner specializing in employment and labor law at Rivkin Radler LLP, is of the opinion that the effects on employers can be minimized.  “If you have a class of exempt employees that do not meet the salary basis test, you can simply increase their salary. However, where that option is not realistic, employers can pay those employees an hourly wage. The key to controlling cost is to find an hourly wage, that, when accounting for overtime, pays the employee a wage this is on average equivalent to their prior earnings as a salaried employee.”


Whatever action you choose to take as an employer, mistakes can and will happen and the cost for these missteps is very high. The penalties for violating the new overtime rule include fines and in some cases even imprisonment. Under the new rule, “any employer” in violation of the unpaid overtime law can be held liable for both the deficit, liquidated damages and one of the largest expenses associated with a wage claims, legal fees.

What Can You Do?

In addition to consulting with your attorney for legal advice on this and other employment practice issues, an employer may be covered for the legal fees associated with a wage & labor claim under their Employment Practices Liability Insurance (EPLI).

EPLI policies typically protect employers against lawsuits filled by their employees for causes of action such as sexual harassment, discrimination, wrongful termination, breach of employment contract, negligent evaluation, failure to employ or promote, wrongful discipline, deprivation of career opportunity, wrongful infliction of emotional distress, and the mismanagement of employee benefit plans but usually exclude wage and hour claims.

The good news is that certain carriers offer a wage and hour coverage endorsement that affords coverage for the legal fees associated with wage and hour claims with a limit of up to $250,000, for a relatively low premium. Adding an EPLI policy, which protects employers against wage and hour claims is highly recommended if you believe your business will have to make changes to its compensation structure because of the new overtime rule. For questions about how you can better position yourself while adjusting to the new overtime rule contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns.