Limited Coverage for Wage and Hour Claims

Cindy H. Stellhorn
Executive Vice President, MJ Sorority

The Department of Labor (DOL) recently announced a substantial change to the minimum salary level for exempt employees. The minimum salary was previously $23,660 per year and it has now been increased to $47,476 per year. Of particular note for employers of chapter house employees, this minimum cannot be satisfied by any application of the room and board value that may be given to these employees, including House Directors. 

As a result of this substantial increase in the minimum wage for exempt employees, we are hearing that many of our clients’ employers of House Directors are re-classifying them to non-exempt. In doing so, these individuals will become hourly employees and ultimately subject to over-time pay of time-and-a-half, should the job demand that they work more than 40 hours in any one week. As you will find, the DOL under the Fair Labor Standards Act (FLSA) has stringent requirements on how hourly employees are to be compensated. Should there be any violation of these requirements, you then have the making of a wage and hour claim.

These claims generally fall into the following areas of violations: 
  • Failure to pay minimum wage            
  • Failure to pay meal period compensation
  • Failure to pay overtime wages          
  • Failure to pay rest period compensation
  • Failure to indemnify for necessary business expenditures (mileage, cell phone etc.)
  • Misclassification of employee
  • Failure to provide wages upon discharge
Under your Directors & Officers/Employment Practices Liability policy, there is a modified coverage for these types of violations of wage and hour. The insurance company, upon notice of a wage and hour claim, is obligated to defend an employer against these obligations up to the limit of coverage under your organization's policy. Should a judgment be rendered against the employer, there is no coverage for the judgment. 

Unfortunately, the MJ Sorority insurance program has seen an increase in these types of allegations and the one absolute given in each of the claims is that each claim is indefensible. We have found through discovery of the claim's allegations that the management of this employment risk has been loosely managed at best or handled recklessly. Employment requirements are rigid and in place to protect the employer and employee if managed appropriately. It cannot be haphazardly handled and if done so, you do so at your own peril for your organization. 

The best antidote for these is to ensure that you have a clear and concise job description in place for all employees, but it is particularly important that the job description for your House Director clearly defines the employee's work hours that you, as an employer, expect and are prepared to support. Once this has been completed, the monitoring of this relationship through careful record and time-keeping is critical, to ensure that the employee operates within the established parameters. 

Review additional resources linked to below or contact your Client Executive with further questions.

Important Update Regarding Change to Overtime Pay Policy

In our last employment bulletin, we focused on the upcoming FLSA changes that will go into effect December 1, 2016. Be sure to review that email and the accompanying resources if you have not already.

Should you have any questions or concerns in the meantime, please do not hesitate to contact your Client Executive.

Protecting Against Slips, Trips and Falls During Winter

While slip, trip and fall hazards are present year-round, there is an increased potential for them in the colder weather months due to snow and ice.

As a property owner or manager, you must make a reasonable effort to reduce the potential for injury to your guests, employees and residents.

The first line of defense against slip, trip and fall incidents includes having a well-planned strategy and implementing a snow and ice removal plan.

1) Develop and implement a written snow and ice removal plan.

  • Determine who is responsible for carrying out the plan. They should be responsible for duties such as selecting contractors, maintaining removal logs, frequency of removal, use of sand/salt, and proper claim handling practices.

2) Determine if the snow and ice removal will be carried out by an in-house employee or an outside contractor.

  • Due to the standby nature of snow removal, an outside contractor may prove the better option. Outside contractors should be selected on their expertise, response times and capabilities. Make sure invoices include details of services rendered.
  • Be sure to verify proper liability insurance coverage of any contractor. Obtain and review certificates and contracts annually, and there should be a cancellation of liability insurance notice requirement in the contract.
  • If your employees perform the snow removal work, provide the right training and equipment, such as insulated boots, gloves and jackets and snow removal equipment.

3) Designate someone to monitor weather conditions, walking surfaces and effectiveness of removal practices.

4) Record removal activities in a log.

  • Information should include the individual’s name, estimated amounts of snowfall, ice buildup, temperature, action taken (e.g., called contractor, used plow, applied sand/salt), date and times, inspection notes and unusual conditions.

5) Perform incident investigations promptly.

6) Putting the plan into action.

  • When determining areas to target first, be mindful of high-risk areas such as high-traffic areas, slopes, and dimly lit or uneven surfaces.
  • Consider the type of treatment for given conditions. Calcium chloride is very effective in extreme cold. Allow sufficient time (if possible) for chemical treatments to take full effect.
  • Ice melt products can leave entrance floors slippery; be prepared to clean up any moisture that is tracked in.
  • When stockpiling snow, be careful as this can reduce visibility around corners.
  • Provide warning signs in high-hazard places and provide adequate lighting where possible.
  • Be aware of refreezing. Melting snow piles adjacent to a walkway can result in refreezing of water on the walkway.
  • Review drainage and puddle formation and ensure that it doesn’t discharge in frequent foot traffic areas.
  • Consider engineering controls such as heated walking surfaces when practical.
  • Relocate downspouts if they discharge water onto walking surfaces.
  • Provide warnings of “hidden” hazards that could be inadvertently struck by cars or trip pedestrians if covered by snow (signs, fire hydrants, curbs, grates, etc.).

7) Jurisdictional considerations.

  • Each municipality has its own ordinances or codes dealing with snow and ice removal. Property owners should know the requirements of the municipality in which they own and manage property. Consulting an attorney and municipal authorities can help you better understand your rights and obligations and make the appropriate decisions to protect your customers, employees, business and the public.
Excerpted and adapted from Travelers Insurance.

Employment Practices Liability Resources

The Employment Practices Liability coverage is provided by Chubb Group of Insurance Companies, one of the leaders in professional and management liability insurance coverage. Employment Practices Liability coverage protects an employer against claims made by employees, former employees, or potential employees that covers allegations of discrimination, wrongful termination, sexual harassment and other employment-related allegations. 

Chubb offers many resources to help our clients better understand and prevent employment-related claims, including the following:
  • website: a free online resources for clients seeking assistance with employment issues
  • Employment Practices Loss Prevention Guidelines Manual: a free booklet that discusses key employment issues in layman's terms and offers proactive ideas for avoiding EPL lawsuits
  • EPL Hot Line: the toll-free hot line enables employers to contact directly with a nationally recognized law firm for immediate answers to your EPL questions.
We are most excited to be able to offer the EPL Hot Line to our clients to assist you with your human resource and employment law questions. The Hot Line is available to employers all over the country, not just specially designated individuals at each organization's national headquarters like the previous helpline.

The toll-free number is (888)249-8425. In order to connect with a Hot Line attorney, you will need to reference your EPL policy number, which should be located on the Insurance Overview that was emailed to you at the inception of your policies. Please contact your Account Executive if you have trouble identifying your policy number.

FLSA Implications

Review our recorded webinar with Michelle Anderson, employment attorney, on the upcoming FLSA changes.

Pay Alternatives

Review this helpful resource from Fisher & Phillips about selected pay alternatives for non-exempt employees in light of new FLSA regulations that go into effect December 1, 2016.

Crime Risk Management Best Practices

As most of you know, there have been some important changes to the crime coverage. Check out this new packet of helpful resources to learn more.

New Webinar: On the Frontlines Version 2.0

Watch our On the Frontlines webinar geared toward House Directors and their employers. More details here.

When an Employee is Injured

The first 24 hours is critical to managing any workers’ compensation injury. Who does what and the sequence and manner in which it is carried out is critical to the out come of the workers’ compensation claim. Best practices indicate that employers should:
  • Respond to an injured employee in a caring and non-judgmental way.
  • Escort the injured employee to the medical provider.
  • Investigate accidents immediately (within 24 hours) and document findings and corrective actions.
  • Report the claim to Heather Cox at MJ within 24 hours of the employee’s report of injury
Read additional tips on post-injury management here.

Check References

If you are hiring a new employee, you are always welcome to call Heather Cox at MJ Sorority to see if there has been any past claim activity associated with the potential employee.
888.442.7470 (ext. 7589)

Meet the MJ Sorority Division

If you're planning an event or have a Certificate of Insurance request, please contact Ruth Akers.
For all claim questions, please contact Heather Cox.
For educational resources and website related questions, please contact Sara Sterley.
For all other questions or requests, please contact your Client Executive.
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