Silver Lining to Ancillary Claims


Even if a policy excludes coverage for wage-and-hour claims, the insurer will defend those claims when a lawsuit also makes ancillary claims of discrimination or retaliation.


“When there is this ancillary claim there are positives because, No. 1, it invokes the coverage and No. 2, it makes it more difficult for class-action certification.”


Wendy Mellk, Jackson Lewis


Many insurance policies exclude wage-and-hour claims. This means that nonprofit organizations and their directors and officers will be liable for defense costs and damages in wage-and-hour claims. For a nonprofit employer to forge a strong defensive position against these claims it must adopt best practices.


An increasing number of wage-and-hour lawsuits also include ancillary claims of discrimination or retaliation. Plaintiffs’ lawyers pursue these claims because insurance policies cover them. But the nonprofit also reaps some positive benefits. When a lawsuit includes ancillary claims, it invokes the insurer’s duty to defend against both the ancillary allegations and the wage-and-hour allegations. Ancillary claims have another benefit. It is very difficult for a lawsuit to be certified as a class action if it includes claims that an employer retaliated against the plaintiff for reporting problems.


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