Most insurance brokers are familiar with Employment Practices Liability Insurance, but one aspect of coverage continues to create confusion: claims involving employee pay. Because these disputes are treated differently than many other employment-related claims, they often expose a coverage gap that surprises clients.

We sat down with William Yankus, SVP and Management Liability and Financial Institutions Practice leader at ProWriters, to break down how Employment Practices Liability policies respond to wage and hour claims, and what brokers should be telling clients right now.

What Is EPL Insurance, and What Doesn’t It Cover?

What EPL Insurance is becomes much clearer once you separate employment-related claims from compensation disputes. EPL Insurance generally responds to allegations of discrimination, harassment, retaliation, and wrongful termination—not whether employees were paid correctly.

“Almost all EPL policies have a wage and hour exclusion built into them,” Yankus explains. “It’s always imperative that the insured and everybody involved in the process is pushing their brokers for a wage and hour extension for defense costs whenever possible.”

Even when that extension exists, it rarely goes far. According to Yankus, most of these endorsements cover defense costs—not the underlying damages—”unless it’s specifically noted.” Coverage for those damages is uncommon, and when insurers do offer it, Yankus notes it “carries six- to seven-figure retentions and requires expensive premiums due to the severity of most wage and hour matters.” SHRM reports that insurers have historically limited this protection to defense expenses, leaving employers responsible for settlements, back wages, and other damages.

Why Wage and Hour Claims Hit Harder Than Clients Expect

Wage and hour matters look mundane on paper—timesheets, overtime calculations, exempt status determinations. That’s exactly what makes them dangerous.

“Wage and hour claims can be especially complex because they often stem from routine payroll and timekeeping practices,” Yankus says, “and they impact multiple employees simultaneously, which can also lead to class action lawsuits, and the damages can be compounding.” A single misclassification decision or timekeeping process, applied consistently across a workforce, becomes a single lawsuit with an entire class of plaintiffs attached.

The numbers show why this matters for risk conversations. A 2025 trend report by Seyfarth Shaw showed that private Fair Labor Standards Act (FLSA) actions in federal courts rose to 5,702 cases in 2025, up from 5,456 the year before, and the Department of Labor recovered more back wages than in any year since 2019. Employment litigation defense spending has climbed alongside it. Per Talli’s employment class action statistics, companies with more than a billion dollars in revenue spent $3.9 billion defending class actions in 2024, and labor and employment cases accounted for 43.4 percent of that spending. These aren’t outlier events. They’re a recurring source of financial and legal exposure for which clients need to plan.

Common Misconceptions Brokers Should Correct

According to Yankus, one of the most common misconceptions is that clients assume any claim arising from the employment relationship is automatically covered under their EPL policy. “The reality is that wage and hour claims are almost always explicitly excluded on all EPL policies,” he says, “and coverage needs to be added via endorsement or a stand-alone policy.”

That gap between assumption and reality is where a broker’s guidance carries the most weight. Clients who believe their EPL Insurance already covers this rarely go looking for a wage and hour endorsement until a claim proves otherwise.

Trends Brokers Should Be Watching Right Now

Yankus points to three developments reshaping wage and hour exposure in 2026:

• Increased scrutiny over employee classification, as agencies and plaintiffs’ attorneys challenge exempt status and independent contractor designations more aggressively
• Expanding state and local wage laws, which layer additional obligations on top of federal FLSA requirements and vary significantly by jurisdiction
• Timekeeping issues tied to technology and AI, as automated scheduling and payroll systems introduce new points of failure in recording hours accurately

“While fundamentals of wage and hour law haven’t changed,” Yankus notes, “several trends are increasing employers’ exposures and making these claims much more complex.” That complexity is compounding at the settlement level too, not just in filing volume, which makes this a moving target on which clients need ongoing guidance rather than a one-time policy review.

Practical Steps Clients Can Take to Reduce Exposure

Given the limitations of coverage, Yankus encourages employers to focus on prevention first. “Strong compliance practices are an organization’s best line of defense,” he says.

He recommends clients focus on:

• Internal risk control audits performed on a regular schedule
• Routine review of pay and classification policies
• Manager training on wage and hour compliance
• Ongoing audits of payroll and classification practices

For clients unsure where to begin, Yankus points them to carrier-provided risk control resources or third-party wage and hour and employment practices experts, rather than waiting for a claim to force the issue.

Bridge the Gap Between EPL Coverage and Client Expectations

Helping clients understand wage and hour exposures is only part of the equation. Finding the right coverage is where ProWriters adds value.

Digital IQ makes it easy to compare EPL Insurance markets across multiple carriers, while Cyber U gives brokers ongoing education on emerging risks and coverage trends. Backed by specialists like Yankus and an experienced broker support team, you’ll have the risk management resources to answer difficult questions, identify coverage gaps, and deliver better solutions for your clients.

Explore our EPL Insurance solutions and see how ProWriters can help you build stronger client relationships through better coverage guidance.