Employers Beware: Breaking Wage Laws May Be On Your Own Dime

Wage & Hour Laws claim
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Employers Beware: Breaking Wage Laws May Be On Your Own Dime

Court Rules Insurance Did Not Apply to Wage Claims

When employers are sued for breaking wage and hour laws, they face both the high costs of defending themselves in litigation, plus potentially crippling damages awards to the employees. Some employers believe that if they purchase Employment Practices Liability Insurance (“EPLI”) or other kinds of business liability insurance, that their insurance company will pick up the tab.  Not so, for a California employer who was recently sued in a class action lawsuit that alleged it didn’t pay its employees for not paying overtime, minimum wage, and for meals and rest breaks as required by California law and the federal Fair Labor Standards Act.

The Ninth Circuit Court of Appeals held last week in U.S. Telepacific Corp. v. U.S. Specialty Insurance Company, 2020 WL 3265238 (9th Cir. June 17, 2020), that the employer was not entitled to either defense costs or payment of the employees’ damages under its insurance policy.  This leaves the employer on the hook to pay its lawyers out of its own pocket, as well as any damages that the employees recover in the lawsuit.  The Ninth Circuit court focused on the language of the insurance policy itself, which did not include wage claims as “covered” matters.

While this case does not govern in New Mexico, it provides a very important lesson to all employers.  While EPLI coverage is important and can provide both legal costs and payment of various employment claims, not all claims are covered. The language of each insurance policy is critical, and New Mexico courts will examine the policy language carefully to determine whether there is insurance coverage for a disputed claim.  Wage and hour claims are often excluded from these policies because they are so expensive.  The bottom line: employers should make sure they comply with all wage and hour laws, and if they do not, the risk may be on them.

Buchanan Law Firm represents employees and counsels employers on wage and hour matters.  If you have questions about your rights or obligations under wage and hour rules, call us at 505-900-3559.

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Hospital negligence resulted in catastrophic injury. This was a case involving a patient who entered the hospital for routine observation but left the hospital with catastrophic and permanent injuries due to neglect and improper treatment. This case involved extensive expert testimony on all aspects of the client’s care, both by hospital administration, hospital employees, and contractors who were involved in her treatment.

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Semi-truck negligence caused wrongful death. This case involved a semi-truck driver who was intoxicated on illegal substances and killed our client. The key to this case was both aggressive discovery work, and understanding the trucking laws that regulate truck drivers and motor carriers, so we could prove how reckless it was to put the driver on the road that day.

$3.5 Million
Semi Truck Catastrophic Injury

Semi-truck negligence caused catastrophic injury. This case involved a semi-truck driver who lost control of his vehicle in a high-traffic area, causing devastating injuries to our client. We were able to reconstruct every step of the events leading up to the crash that day to piece together why this happened, using sophisticated experts in reconstruction engineering.

$3.0 Million
Semi Truck & Corporate Negligence

Semi-truck and corporate negligence caused wrongful death. Our client died as a result of the defendant’s negligence in parking a commercial vehicle. The key to this case was understanding trucking regulations and local ordinances at play to show how the situation should have been handled safely.

$1 Million
Semi Truck Wrongful Death

Semi-truck causing wrongful death. This sad case involved the tragic death of our clients when a semi-driver was high on illegal substances. The key to this case was working closely with law enforcement and our reconstruction expert to identify all of the assets we could recover for these clients so that they could be as fully compensated as possible.

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