Wage-and-Hour Lawsuits are a Looming Uninsured Risk for Employers, According to New Advisen Report
Lawsuits Surge, But Insurers are Reluctant to Provide Coverage
New York (March 30, 2009) – Wage-and-hour lawsuits have surpassed employee discrimination suits, measured by both number of filings and size of settlements, according to a new report from Advisen Ltd. Most insurers have shied away from covering these suits, leaving companies with a substantial uninsured exposure to loss.
“Publicity surrounding changes made to the Federal Labor Standards Act in 2004 has been a catalyst for class action lawsuits,” explained John Molka III, the author of the report. “On top of that, enforcement efforts by the US Department of Labor have further stimulated class actions. American businesses are exposed to very large losses from these suits, but the insurance industry has been slow to respond with coverage for this risk.”
The Department of Labor estimates that 80 percent of employers are not in compliance with applicable wage and hour laws. The retail sector has been targeted in many of the largest suits – Wal-Mart alone has been named in over 80 wage-and-hour class action civil suits, and has agreed to settlements in the hundreds of millions of dollars – but no sector is immune.
“Wage-and-hour issues are not limited to hourly employees,” said Dave Bradford, Advisen executive vice president. “Companies primarily employing salaried professionals have been subject to large class action suits as well, and there have been eye-popping settlements.”
Insurance companies have shied away from providing coverage largely because wage-and-hour lawsuits have been viewed as the outcome of deliberate acts rather than fortuitous events. Recently, some insurers have begun offering coverage for the costs of defending these suits, and at least two insures have introduced policies that respond to settlements.
Advisen’s new 21-page report, The Threat of Wage-and-Hour Lawsuits, is essential reading for risk managers and human resource officers. It also is of interest to brokers and underwriters grappling with the insurability of this rapidly expanding exposure. The report examines the drivers of these suits, and explores recent developments in wage-and-hour litigation. Additionally, it includes a survey of insurers that provide coverage that may respond to these suits. Purchase the report for $499 at The Advisen Corner Store, http://corner.advisen.com/reports_topical_wage_hour_blurb.html.
Wage-and-Hour Cases in Advisen Large Loss Database
Advisen tracks over 6,000 significant Employment cases and events. These records total more than $12 billion in loss and they range from Hostile Work Environment to Whistleblower/Retaliation to Discrimination & Harassment. One of the most rapidly expanding case types is Wage-and-Hour. There currently are 561 such cases cases in the database. Call Advisen at +1-212-897-4800 for more information, or visit the Advisen Corner Store to purchase information on individual cases. Visit http://corner.advisen.com/analytics_mscad.html and describe the type of material you’re looking for.
About Advisen
Advisen integrates business information and market data for the commercial insurance industry and maintains critical risk analytics and time-saving workflow tools for over 530 industry leading firms. Through its work for the broadest customer base among information service providers, Advisen delivers actionable information and risk models at a fraction of the cost to have them built internally. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry’s deepest data sets with proprietary analytics and offers insight into risk and insurance that is not available on any other system. Advisen is headquartered in New York. For more information, visit http://www.advisen.com, or call +1.212.897.4800 in New York or +44(0)20.7929.5929 in London.