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Employment Practices Liability Insurance - Conference Materials
 

Employment Practices Liability Insurance - Conference Materials

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The nation’s leading EPLI forum is back to ensure that you are prepared to manage and defend against the increasing number of claims being filed, positioned to take advantage of new opportunities in ...

The nation’s leading EPLI forum is back to ensure that you are prepared to manage and defend against the increasing number of claims being filed, positioned to take advantage of new opportunities in the EPLI market, equipped to minimize exposure to risk, armed to tackle the rising costs of litigation, and primed for aggressive new EEOC initiatives.

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    Employment Practices Liability Insurance - Conference Materials Employment Practices Liability Insurance - Conference Materials Presentation Transcript

    • ATLANTA LABOR & EMPLOYMENT The Evolution of Wage & Hour and EPLI Offering and Obtaining Coverage for and Reducing Exposure to Wage & Hour Claims January 29, 2013 GREENBERG TRAURIG, LLP  ATTORNEYS AT LAW  WWW.GTLAW.COM ©2012. All rights reserved.
    • FLSA Cases on the Rise  20-year upward swing □ 1,457 FLSA cases filed in 12 months ending 9/30/93 □ 4,055 FLSA cases filed in 12 months ending 3/31/03 □ 7,064 FLSA cases filed in 12 months ending 3/31/12 □ Increase of over 74% in last ten years alone  Settlements are both common and expensive □ Offer of judgment is common FLSA strategy □ One study found a per-plaintiff settlement amount of approximately $5,000 per plaintiff in 2011  It takes only 200 employees to reach $1 million | ATLANTA LABOR & EMPLOYMENT
    • Evaluating Industry Trends Relating to Wage & Hour Coverage  Long history of not covering wage & hour claims  Recent clamor for coverage from insureds  Impact on the market of Aon’s new Wage & Hour product in 2012 | ATLANTA LABOR & EMPLOYMENT
    • Determining Whether to Offer Wage & Hour Coverage  Is the market hardening? □ General upward trend of premiums □ But a wide disparity in premium increases/decreases, partly depending on size of employer to be covered □ Other areas of market hardening – retentions, coinsurance, deductibles, hammer clauses | ATLANTA LABOR & EMPLOYMENT
    • Determining Whether to Offer Wage & Hour Coverage  Competitive considerations □ Relatively few players in EPLI market, and even fewer in wage & hour area □ Balances out market hardening, to some extent □ Willingness to sacrifice market share to increase premiums? | ATLANTA LABOR & EMPLOYMENT
    • Determining Whether to Offer Wage & Hour Coverage  Public policy □ Reluctance to cover wage & hour is ostensibly based on public policy □ Moral hazard to insure against improper payment of wages □ Is wage & hour really any different than other EPLI claims in this regard? | ATLANTA LABOR & EMPLOYMENT
    • Underwriting Considerations When Offering Wage & Hour Coverage  Scope of Coverage □ Defense-only sublimits  More common than indemnity coverage □ Indemnity coverage  Starting to come around  Employer size as a factor? □ Coverage limits  Single v. Aggregate □ Claim types: Misclassification, travel time, off-the-clock, retaliation  Industry trends in coverage | ATLANTA LABOR & EMPLOYMENT
    • Underwriting Considerations When Offering Wage & Hour Coverage  Factors to consider □ Insured’s policies and procedures  Procedures for proper classification of exempt/non-exempt  Policies for off-the-clock work  Time recording methods for exempt and non-exempt  Internal complaint procedures | ATLANTA LABOR & EMPLOYMENT
    • Underwriting Considerations When Offering Wage & Hour Coverage  Factors to consider □ Employee composition  White collar v. blue collar?  Use of independent contractors?  Use of PEO or employee leasing company?  Stable workforce or high turnover?  Large employer with defined roles v. small employers with fluid, cross-functional workforce | ATLANTA LABOR & EMPLOYMENT
    • Underwriting Considerations When Offering Wage & Hour Coverage  Industry-specific considerations □ Industries with significant on-call time  E.g., health care, tech support □ Traditional (if questionable) use of independent contractors  E.g., auto dealers/sales staff □ Industries with historic donning/doffing or travel time issues  E.g., food processing or airport workers □ Industries with high-income, front-line exempt employees  E.g., mortgage brokers | ATLANTA LABOR & EMPLOYMENT
    • Assessing the Costs and Benefits of Available Wage & Hour Coverage  Consider all the costs, not just premiums □ Deductibles, co-insurance, hammer clauses, etc. □ Increased administrative burdens  Consider all the benefits, not just defense/indemnity □ Access to best practices, especially for small- to mid-size employers □ Increased workplace satisfaction from proper payment □ Avoidance of litigation | ATLANTA LABOR & EMPLOYMENT
    • Understanding ERISA Claims as They Relate to Wage & Hour Claims  Wages and benefits are two sides of the total compensation coin.  When total compensation is wrong, it may trigger suits under ERISA and FLSA  For example: □ A misclassified independent contractor claims he should have been paid overtime and allowed to participate in ERISA benefit plans  Overlap where ERISA benefits are derivative of FLSA wages □ E.g., 401(k) contributions as a percentage of total wages | ATLANTA LABOR & EMPLOYMENT
    • Impact on EPLI of Overlap Between Wage & Hour Claims and Other EPL Claims  Start with the specific language of the policy and the complaint  Impact of duty-to-defend provision on “mixed” cases  Treatment of FLSA retaliation cases that overlap with FLSA wage claims | ATLANTA LABOR & EMPLOYMENT
    • Reducing Exposure to Wage & Hour Claims  Instituting effective policies and procedures □ Proper classifications of exempt/non-exempt and employee/independent contractor □ Proper time reporting and recording procedures, potentially for all employees □ Proper complaint procedures for internal grievances □ Other best practices? | ATLANTA LABOR & EMPLOYMENT
    • Reducing Exposure to Wage & Hour Claims  Obtaining review by outside counsel □ Can obtain privileged classification analysis □ Can try to preemptively “fix” FLSA problems □ FLSA audit may uncover other legal landmines  Key Issue – how do you fix past FLSA violations without triggering an avalanche of lawsuits? | ATLANTA LABOR & EMPLOYMENT
    • EPLI Issues That Can Arise Involving Independent Contractors or Joint Employment  Coverage typically limited to “employees”, not independent contractors □ Tough choice for employer – calling them “independent contractors” may win the FLSA case, but result in denial of coverage □ So is there incentive to lose the FLSA case to win the coverage? □ Does this pose a conflict of interest for the attorney? | ATLANTA LABOR & EMPLOYMENT
    • EPLI Issues That Can Arise Involving Independent Contractors or Joint Employment  Joint employment arises in two situations □ Corporate affiliates □ Employee leasing firm or PEO  Joint employment relationships should be disclosed and contemplated up front in policy  Try to make sure that coverage will not be at odds with substantive defenses | ATLANTA LABOR & EMPLOYMENT
    • ATLANTA LABOR & EMPLOYMENT QUESTIONS January 29, 2013 GREENBERG TRAURIG, LLP  ATTORNEYS AT LAW  WWW.GTLAW.COM ©2012. All rights reserved.