For the most part, business liability insurance policies do cover the cost of defense and settlements in numerous types of employee lawsuits. It usually comes down to the exact language in the policy, but coverage is often extended for claims of sexual harassment, wrongful termination and discrimination. This is of paramount concern to employers, but it’s also relevant to employee plaintiffs in employment litigation because if the insurer doesn’t cover it, the employer will be directly responsible. If the damage award is sizable enough and the company small enough, it could mean you’ll have difficulty collecting on the damage award in your employment lawsuit.
This is especially pertinent to those filing a claim for violation of California’s wage and hour laws. Many employer liability insurers don’t carry coverage for this type of claim in California. Wage and hour claims are often explicitly cited as an exclusion or else businesses pay a premium for coverage.
However, a recent California Court of Appeal decision paved the way for more wage and hour claims to be covered by employer liability insurers. In Southern California Pizza Company, LLC v. Certain Underwriters at Lloyd’s, London, the appellate panel ruled that wage and hour claims against a pizza shop (for failure to reimburse for reimbursable expenses) was not barred under the business’s policy exclusion on wage and hour claims.
Why? Continue reading