CommentaryAttorney Analysis from Westlaw Today, a part of Thomson Reuters.

February 20, 2026 – In 2025, the plaintiffs’ bar filed more wage-and-hour class and collective actions against employers than any other category of complex litigation. Duane Morris LLP, Class Action Defense Group, Wage & Hour Class and Collective Action Review: 2026, opens new tab, at 1 (2026).

This trend is underscored by the $233 million settlement recently reached by Disney in Grace, et al. v. The Walt Disney Co., in an Orange County Superior Court, which resolved claims that the Walt Disney Company violated the City of Anaheim’s minimum wage ordinance. Hardly a “Mickey Mouse” settlement.

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While an outlier in terms of size, the Grace case nonetheless serves as a reminder that wage-and-hour exposure has become one of the most significant, fastest growing, and perhaps, the most predictable risks employers currently face. Unanticipated wage and hour liability might be perceived as just one more insurable risk. But when employees file lawsuits alleging that they were short-changed on their compensation, employers might be surprised to find the protections under their array of insurance policies are minimal or non-existent.

The reality is that wage-and-hour liability is often regarded as part of the “cost of doing business” for employers. A regularly available insurance product that covered wage-and-hour liability risks might be the most popular insurance product business owners could imagine. However, the reality is that no such product exists.

For instance, a commercial general liability (“CGL”) policy is usually written to insure against certain bodily injury, property damage, and personal or advertising injuries. Wage-and-hour claims, on the other hand, don’t involve accidents that cause injury, or any tortious conduct. Workers just didn’t get paid enough (or they were not paid the right way).

Unable to obtain coverage through a CGL policy, an employer might turn to an Employment Practices Liability Insurance (“EPLI”) policy for wage-and-hour coverage. EPLI policies are designed to address employment-related claims, such as discrimination, harassment, retaliation, and wrongful termination. However, an employer will soon learn that EPLI policies do not cover wage-and-hour claims.

Given the prevalence of wage-and-hour lawsuits, why would wage-and-hour claims be excluded from EPLI or other liability policies?

Most states define “insurance” as a contract to indemnify another against loss, damage or liability arising from a contingent or unknown event. The purpose of insurance is to insure against a fortuitous loss. Is the classification of an employee as an independent contractor a fortuity?

Wage-and-hour claims usually arise from payroll practices, classification decisions, scheduling policies, or recordkeeping systems, areas that are generally purposeful decisions within an employer’s control. As a result, unavailability of insurance for wage-and-hour liabilities is probably to be expected.

And perhaps more importantly, if employers could cost-effectively shift the risk of paying employees less than the law requires (or working employees harder than the law allows) to an insurer, would employers be incentivized to underpay or overwork employees? That is not a trick question. Of course they would.

And this is why wage and hour exclusions and limitations are pretty much universal in EPLI policies. A primary exception, however, may be when there is a wage-and-hour endorsement. Even then, coverage is limited — often to defense costs only.

For example, in the 2020 case, Sirob Imports Inc. v. Mount Vernon Fire Ins., the employer’s EPLI policy excluded claims arising out of wage disputes. However, the EPLI policy also had an endorsement specifically covering wage-and-hour claims but limited such coverage to a $100,000 sublimit. The U.S. Eastern District of New York applied the EPLI policy endorsement and limited this coverage to a $100,000 sublimit.

In 2011, in Vozzcom, Inc. v. Beazley Ins. Co., an EPLI policy excluded wage-and-hour claims from the “Insured Event” definition. However, the insured purchased a wage-and-hour enhancement endorsement that provided limited defense cost coverage for wage-and-hour claims.

The insurer argued it was not obligated to defend Vozzcom because its claim did not qualify as an “Insured Event.” However, a U.S. District Court in Florida applied Florida law in finding that an apparent conflict in the policy language meant that the policy’s wage-and-hour endorsement created defense cost “coverage” for wage and hour claims.

Wage-and-hour claims are largely governed by state law, with federal law generally setting a baseline requirement under the Fair Labor Standards Act (“FLSA”) for minimum wage and overtime. EPLI policies may have exclusions tied to the FLSA and analogous state wage-and-hour laws. These exclusions may broadly preclude coverage for claims “arising out of,” “based upon,” or “related to” violations of the FLSA or any similar state, or local wage-and-hour statutes.

Disputes have arisen as to whether employee claims are, in fact, a wage-and-hour claim. In a 2019 decision, Southern California Pizza Co. LLC v. Certain Underwriters at Lloyd’s, London, the California Court of Appeal held that a wage-and-hour exclusion in an EPLI policy did not preclude claims alleging failure to reimburse restaurant delivery drivers’ travel, cell phone and mileage expenses. The court held that “[d]isbursements for losses and work-related expenditures are not payments made in exchange for labor or services.”

Insurance coverage for wage-and-hour is extremely rare, and not readily available at cost-effective prices. Meanwhile, the recent frequency of wage-and-hour suits in many states has made the occasional lawsuit one more cost of doing business.

Employers cannot count on insurance to handle wage-and-hour liabilities. Instead, employers need to review their wage and hour policies and practices frequently, stay current on applicable law, and seek guidance from attorneys who devote a large share of their practice to wage-and-hour issues.

Erin Mindoro Ezra is a regular contributing columnist on insurance coverage for Reuters Legal News and Westlaw Today.