How will new overtime rules impact EPL exposure?

How will new overtime rules impact EPL exposure? | Insurance Business America

How will new overtime rules impact EPL exposure?

Will the updated Fair Labor Standards Act and other regulations put pressure on employment practices liability policies?

Jade Rabacal-Senior underwriting manager-Tokio Marine HCC

“The challenge employers face regarding the new FLSA rule is local interpretation and enforcement. Not only do they need to consider how the new federal rule will affect them, but also how this will impact state and local wage laws.

For this reason, employers not only need employment practices liability insurance,they also need access to localized expertise. It is, therefore, an advantage to carry EPL insurance that comes with tools and resources that offer state-specific HR content and advice. Especially for smaller businesses without internal HR experts,these resources will help navigate ever evolving employment law and regulations.”

Chris Williams-Employment practices liability product manager-Travelers

“Any change in the law creates exposure and a potential for more wage and hour litigation as employers try to comply with the new rules. An estimated 1.3 million additional workers will now be eligible for overtime pay under the Fair Labor Standards Act, so employers need to make decisions on employee salaries, track work hours and pay overtime while classifying workers correctly.

Jennifer Bergstrom-AVP and team manager, management liability-Hiscox USA

“The increased salary threshold for the ‘white-collar’ exemptions under the FLSA isexpected to result in approximately 1.3 million currently exempt employees being reclassified as non-exempt.

As a result, we anticipate an uptick in wage and hour litigation for the retail, hospitality and service industries, because entry-level managerial employees in those industries generally earn less than the new increased salary threshold. Employers in those industries should [consider] whether salaries for managerial-level employees need to be increased or changed. Employers that fail to do so are likely to find themselves at heightened risk of litigation.”