The Merriam Agency has been serving Rescue Missions since 1905. Speaking nationally, providing free consultation to AGRM members, and solving numerous problems, the Agency has earned the distinction of the exclusively endorsed strategic partner status since 2008.

Wage and Hour Threat

One of the advantages of being a national insurance consultant and risk manager is that it allows us to see legal trends that are growing before our clients are hit with the latest threat, and thereby, we often have time to build a defense before the storms hit. One such trend that we are seeing is the rise in employment-related suits, specifically “wage and hour” claims. This is an area where few insurance policies provide automatic coverage, and most simply exclude the coverage altogether. The challenges are further exacerbated by law firms which specialize in prosecuting these types of claims—and reportedly, they are adept at cultivating relationships with your former employees who may be easily agitated into believing they have been aggrieved. In a two-part article on this growing trend, seemingly begun in California and quickly moving east, we will look at the cause of such and offer some tactics to help avoid wage and hour claims against your organization.

The Fair Labor Standards Act (FLSA) was enacted in 1938 and is administered by the U.S. Department of Labor, Wage & Hour Division. Its purpose is to:

  1. Set a minimum wage below which an employee’s pay cannot fall.
  2. Encourage full employment by establishing a maximum number of hours employees can work before an employer must pay overtime additional wages.
  3. Require equal pay for equal work, regardless of age, gender, race and other federally-protected personal attributes.
  4. Safeguard child workers.

Some classes of employees are exempt from both minimum wage and overtime pay. These include executive, administrative, professional employees (i.e. teachers), outside sales employees, certain seasonal employees, and certain farmworkers. Otherwise, most employees are subject to wage and hour rules.

Compliance can be complicated, and employers who fail to comply with FLSA can be subject to significant back-pay liability, damages and legal fees. Added to the complexity may also be the consideration of state and local labor laws.

The following are some common employment-related situations that may result in lawsuits.

Unpaid Overtime

This is the most common of Wage & Hour Claims—and it usually comes from a former employee, who often alleges that [you] did not pay for the time they spent checking and responding to email after hours. Some states are beginning to recognize the challenge when employers are unaware that employees are performing work-related tasks after-hours, but we continue to see suits where former (usually disgruntled) employees are suing for back wages plus legal fees.

Mixing Volunteers & Employees

Having a volunteer work alongside someone you are employing, for the same position, opens up your organization to a lawsuit for unfair hiring practices. Recently, a mission settled a lawsuit from a former resident who, as a part of his work therapy, helped with the dishes alongside an employed individual. While many missions implement “work therapy” as an exchange for services provided by a resident, a volunteer may not be used to replace the services of an employee.

Compensating Volunteers

Some organizations want to provide some compensation for their workers, but for varied reasons, are unable to offer employment. Therefore, it seems that the best solution is to provide a “stipend” for the person’s time. Any compensation in exchange for work performed must meet federal regulations, including hourly rates for employees. One organization, recently accused of this, was required to pay the unpaid balance of an hourly wage retroactive back to the first day of service.

What to Know: Insurance

Insuring your organization’s Employment Practices Liability (EPL) is complex—and the limits of coverage on the declarations page do not assure Wage & Hour coverage. Very few insurance companies will provide defense coverage for these labor-related claims, and currently, 7 out of 10 surveyed missions do not have the coverage.

What to Do: The Basics of Risk Management

Ask your HR consultant, insurance broker, lawyer, and risk management team to help you identify other areas to be addressed.

  1. Ensure that your policies & procedures are clear on when/where work is to be performed for your mission.
  2. Establish job descriptions, and periodically review and/or compare them to the employee’s actual job duties.
  3. Keep accurate records of time worked and pay allotted to employees.
  4. Implement an overtime authorization form for all non-exempt (hourly) employees.
  5. Display an official poster, in an employee congregating area (i.e. break room), outlining the requirements of the FLSA.
  6. Utilize outside expertise to ensure that your compensation practices meet federal, state, and local regulations.
  7. Ensure that your Employment Practices Liability coverage includes “wage & hour” (or FLSA) defense—or place at least $30,000 in reserve so you can hire an attorney to respond should you have one of these claims.

To learn more visit our website or call to speak with one of our risk management experts.

Jon Barron

Jon Barron

Few people seek friendship with a car salesman... but that's neither the reason I entered nor exited the car business. Today, many people refer to me by a number of titles, one of which is insurance salesman, but the title only covers one small aspect of my roles. I hope I'm able to bring honor to each role I fulfill – husband, father, elder, teacher, facilitator, mentor, woodworker, fisherman, and more.

Expertise. For over 30 years, I've been blessed with diverse experience and many opportunities to listen and develop solutions to meet my clients' goals. I enjoy serving non-profit organizations as a risk management consultant and insurance broker.

Partnership. Partnership with our clients is founded on award-winning service, eduction and solid risk management expertise. Many clients think of our team as an extension of their own staff, providing insight, guidance and insurance brokerage services. It is a privilege to be recognized as a valued partner in helping our partner-clients achieve their risk management and financial goals.

Education. I’m fortunate to interact with great leaders as I teach about insurance and risk management... a normally-tedious topic which we seek to liven up through interactivity, discussion, and real-life examples. We bring a national perspective to the discussion to ensure relevance and practical application. In our seminars and discussions, we promote a wholistic risk management philosophy with practical steps for each person to take back and implement.

I welcome any questions you might have. I would enjoy the opportunity to chat on the phone about your goals, speak with your board about their role in risk management, facilitate staff workshop, or explore whether it might make sense for the Merriam Agency to be your insurance broker.

Specialties:
• Insurance for Non-Profit and Social Service Organizations
• Cyber, D&O, & Employment Practices Liability
• Professional Liability & Medical Malpractice
• Unique & Hard-To-Insure Risks

Branch Manager:
Colorado Springs, CO

(719) 488-3206 Direct



Brian H Merriam, CPCU, ARM, AAI, President

Brian H Merriam, CPCU, ARM, AAI, President

Brian began his career in the insurance business with his father in 1983 as a general lines producer. Since his father's retirement in 1989, he has been responsible for agency personnel, marketing and sales strategy. He instructs on insurance and risk management topics for various organizations around the United States and is active in church and community affairs. He is married and the father of three children. Brian considers himself blessed to work with his clients and staff and trusts that the Merriam Agency is making a positive difference in the lives of others.

President
376 Broadway
Schenectady, NY

Toll-Free:
(877) MERRIAM x 201
(877) 637-7426 x 201

Brian H Merriam, CPCU, ARM, AAI, President

About Brian H Merriam, CPCU, ARM, AAI, President

Brian began his career in the insurance business with his father in 1983 as a general lines producer. Since his father's retirement in 1989, he has been responsible for agency personnel, marketing and sales strategy. He instructs on insurance and risk management topics for various organizations around the United States and is active in church and community affairs. He is married and the father of three children. Brian considers himself blessed to work with his clients and staff and trusts that the Merriam Agency is making a positive difference in the lives of others.

President
376 Broadway
Schenectady, NY

Toll-Free:
(877) MERRIAM x 201
(877) 637-7426 x 201