Posted on 02-Oct-09 by The Timekeeper

If you think it’s just your company that could be on the hook for FLSA violations, think again. Back in July 2009, the Ninth Circuit Court of Appeals in the case of Boucher v Shaw held that individual managers and corporate officers can be personally liable for unpaid employee wages under the FLSA.

In the case in question, Castaway Hotel Casino and Bowling Center had filed for bankruptcy protection; shortly after that, some former employees filed a wage and hour lawsuit seeking unpaid wages, vacation and holiday pay. The court decided the employees could pursue federal wage and hour claims filed personally against the CEO, CFO and other officers of the corporation.

What’s worse, your company’s Employment Practices Liability Insurance likely does not cover wage and hour claims against individuals. Some policies may pay for the legal costs of mounting a defense, but don’t provide indemnity. And almost none of them will pay the back wages assessed if you’re found to be personally liable.

So, now, in addition to treating your employees right and checking with your employment law specialist to make sure your wage and hour policies and procedures are on the up-and-up (to help avoid the lawsuits in the first place), you also need to check with your insurance agent. Verify what coverage you have and what the limits are.

H/T to Cliff Rudolph’s Insurance Blog for bringing this issue to our attention!

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