Applying Virginia law, the Fourth Circuit today interpreted a commercial insurance policy that required the insurer to “pay for all loss resulting from a claim for a wrongful act” to include coverage for liquidated damages and attorneys’ fees that may be ordered in a FLSA overtime and backpay case. The court held that the insurer had a duty to defend its insured and a duty to indemnify beyond any payments due as back wages. (Back wages would not be “losses” “caused” by the FLSA violation, but rather payments that must be made according to a pre-existing duty.) Judge Niemeyer wrote the opinion for the court in Republican Franklin Insurance Company v. Albemarle County School Board, in which Judge Motz and Judge Floyd joined.
Fourth Circuit rules on insurance coverage for FLSA violation as a “wrongful act”
February 24, 2012 by Kevin C. Walsh