Failure to pay overtime liability insurance is a type of insurance that provides coverage to employers for potential financial losses resulting from claims of failure to pay overtime wages to employees. Under the Fair Labor Standards Act (FLSA) and state wage and hour laws, non-exempt employees are entitled to receive overtime pay at a rate of one and a half times their regular rate of pay for any hours worked beyond 40 hours in a workweek.
As attorneys, we often see cases where employees allege that their employer has failed to pay them overtime wages. For example, an employer may be sued by employees for not accurately tracking employee hours worked, misclassifying employees as exempt from overtime, or simply failing to pay overtime wages. In such cases, the employer may face significant legal expenses, as well as potential penalties and damages.
Failure to pay overtime liability insurance can provide coverage for the costs associated with defending against these claims, as well as any damages or settlements that may be awarded. The coverage provided by this type of insurance can vary depending on the specific policy, but typically includes protection against claims of failure to pay overtime wages, including unpaid overtime wages, interest, penalties, and attorney’s fees.
It’s important to note that failure to pay overtime liability insurance is not a substitute for compliance with wage and hour laws. Employers should take steps to ensure compliance with applicable laws and regulations, such as accurately tracking employee hours worked, properly classifying employees as exempt or non-exempt from overtime, and maintaining accurate records of employee hours worked.
In summary, failure to pay overtime liability insurance can provide valuable protection to employers for potential financial losses resulting from claims of failure to pay overtime wages. Employers should carefully review their insurance policies to ensure that they have adequate coverage for their specific risks and exposures related to compliance with wage and hour laws.