Moving Company Insurance Tips: Beware of Wage and Hour Claims
In recent years, wage and hour lawsuits have climbed sharply becoming one of the costliest employment practice exposures. In fact, in 2011 alone, more than 7,000 collective actions were filed in federal court alleging wage and hour violations under the Fair Labor Standards Act (FLSA), an increase of about 400% since 2000 according to CNN Money. With this influx of activity, the Department of Labor appears to be cracking down on enforcement.
What does this mean for your moving company?
1. You may not have insurance protection. Many employment practice liability insurers now exclude wage and hour claims from their policies.
2. Insurance coverage is difficult to obtain, so compliance is your best defense. Because these lawsuits are so expensive, and because a large majority of employers are out of compliance in some way, many insurers have stopped offering coverage. With this in mind, strict compliance is your moving company’s best defense against claims.
3. Don’t assume you already comply. There are several gray issues and some aspects of the law are confusing. For example, can you dock the pay of a salaried employee who is consistently late for work? Are you liable if employees fail to take the breaks to which they are entitled?
Common wage and hour violations include:
- Misclassification of exempt and non-exempt status
- Miscalculation of bonuses and commissions
- Failure to pay overtime due to misclassification as exempt
- Requiring employees to work off-the-clock (particularly complex for remote, offsite workers)
- Misclassification of workers as independent contractors instead of employees
How can you protect you moving company?
- Watch out for employment practice gray areas and consult legal counsel before taking action.
- Audit employee job descriptions and classifications.
- Review worker classification rules and regulations regarding pay and hours.
- Keep complete and accurate employee records.
- Maintain accurate pay records.
- Attend wage and hour training.
- If you have an Employment Practices Liability Insurance policy, check to see if it includes coverage for wage and hour exposures.
In the moving business, there are many exposures – and many of them are outside of your control. Fortunately, wage and hour compliance is something you can manage, and with diligent attention, you can avoid expensive lawsuits.
One last note: If you haven’t already done so, cover your customers’ goods and insure your moving company with smart, strategic full value protection insurance. This is essential protection for the busy season!
