Wage-and-hour Violations by Restaurants and Insurance Coverage
200% Increase in Wage-violation Lawsuits
Wage-violation lawsuits have doubled nationally in the last 10 years, with various claims such as under compensation for overtime, mixing “independent contractors” with “employees”, not withholding taxes with cash payments, etc.
Restaurants’ Violations of Minimum Wage and Overtime Law
Restaurant of all types of eateries are no exception. Here are a couple of examples for wage violations by restaurants:
After an investigation, the Department Of Labor (“DOL”) ordered the owners of 5 restaurants to pay $2 million owed to 129 employees for minimum wage and overtime in Michigan.
Another DOL agency’s investigation of 5 restaurants in Houston resulted in $334,000 back pay to 154 employees, even though some are no longer working there, for minimum wage and overtime violations of the Fair Labor Standards Act (FLSA.) The DOL agency claimed that the restaurants did not pay time-and-a-half overtime rate to those working more than 40 hours a week, and also found the restaurants did not keep proper records.
CA state law is more employee-friendly in many ways than the federal FLSA. As opposed to DOL, California Labor Commissioner’s Office deals with many wage and hour issues regarding minimum wage, overtime, meal and rest breaks, etc. Please consult labor attorneys such as James Wu for details.
Customized Employment Practices Liability Insurance (EPLI) Policies
In our increasingly litigious era over wages and hours, a customized EPLI policy is truly necessary for restaurants, whether it is a fast food or a high end restaurant, to alleviate much of the pain such kinds of claims and lawsuits can afflict.
Endorsements and Specified Coverage
Due to limitations of an EPLI coverage in each policy, it is important to first talk to EXPERIENCED commercial insurance experts like the Rick Callaway Team, to find out the exact kinds of claims covered by a policy. Different endorsements cover different types of claims such as workplace torts, breach of contract, wrongful discipline, negligent evaluation and failure to promote, defamation, etc.
Wage-and-hour claims may be covered by endorsements only, since policies may have limits and exclusions. The devil is always in the details: the endorsements may protect against litigation defense costs only, without indemnification for wage-and-hour class action suits.
Precautionary Measures for Reducing Risks
Employers can take proactive steps to minimize exposures to non-compliance risks for wage and hour violations, such as:
- Consult with an employment attorney, -we can refer you highly experienced employment attorneys such as James Wu, who can
- give preventive advice,
- review and update company’s training programs, manuals, procedures,
- conduct a wage-and-hour audit for both employees and independent contractors,
- Update job descriptions regularly.
- Check if paystubs information is in compliance,
- Train HR and managers on FLSA, to handle wage and hour issues such as travel, sick leave, breaks and authorized or unauthorized overtime,
- Strategize for executing time recording procedures with a system, to record lunch and break time daily,
An Ounce of Education is Worth a Pound of Cure
As DOL increases scrutiny and enforcement of complex labor law, employers need to pay close attention and diligently get everyone educated about many possible scenarios of non-compliance with wage-and-hour laws.
The Rick Callaway Team are known as the Extra Milers in protecting your business, employers, employees, and assets. We leave no stone unturned to get you the best deal. No under-coverage. No overpricing. Please contact us for a free consultation:
Cell: 925 788 5558