A Pennsylvania federal court, applying Pennsylvania law, held that a policy’s Wage and Hour Violation exclusion applied to the entirety of underlying class actions that alleged the insured employer schemed to underpay its prevailing wage workers. Twin City Fire Ins. Co. v. Glenn O. Hawbaker, Inc., 2023 WL 8791175 (M.D. Pa. Dec. 19, 2023). Rejecting the insured’s argument that coverage should still exist for its alleged liability to class members who were not underpaid but only untimely paid, the Court concluded that all the allegations were related to claims involving Wage and Hour Violations and were thus excluded from the policy’s fiduciary liability coverage.
In two parallel class actions, the insured’s prevailing wage workers alleged that their employer failed to make timely wage payments, misappropriated retirement account funds, violated Pennsylvania and federal wage payment and collection laws, failed to make timely contributions to retirement accounts as required by ERISA, and breached fiduciary duties. Both class actions alleged that the insured employer schemed to underpay its wage workers by overstating the value of fringe benefits.
The employer sought coverage pursuant to its insurance policy that covered losses incurred by the insured for claims arising from actual or alleged violations of fiduciary duties imposed by ERISA or any similar law. However, the policy excluded coverage for “any Claim based upon, arising from, or in any way related to any Wage and...
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