Daily Blast - September 24, 2019 - Lewis Brisbois Bisgaard & Smith LLP

In Southern California Pizza Co. v. Certain Underwriters at Lloyds (Sept. 20, 2019, G056243) ___ Cal.App.5th___, Fourth District, Division Three (Santa Ana), the Court of Appeal interpreted the scope of an employment practices liability insurance policy exclusion that related to “wage and hour or overtime laws.” While the trial court interpreted the policy language as excluding all provisions of the Labor Code, the appellate court did not agree. The policy language at issue provided:

This policy does not cover any Loss resulting from any Claim based upon, arising out of, directly or indirectly connected or related to, or in any way alleging violation(s) of any foreign, federal, state, or local, wage and hour or overtime law(s), including, without limitation, the Fair Labor Standards Act. . . .

On appeal, the court determined the language of the exclusion was “more narrow in scope” than the trial court found; it concerned only those laws regarding duration worked as well as remuneration received in exchange for work. Thus, many of the disputed underlying causes of action were potentially subject to coverage.

Based on the policy’s exclusionary language, the appellate court interpreted the ordinary definition of “wage” and “hour” and concluded that the phrase “wage and hour. . .law(s)” referred to laws concerning duration worked and/or remuneration received in exchange for work. (Slip opn., p. 7.) The court then analyzed the individual causes of action to determine whether they would be within the scope of the exclusion. The causes of action brought pursuant to Labor Code sections 2800 and 2802 were outside of the scope of this exclusion. (Id. at p. 12.) Review of this opinion may be helpful when interpreting coverage and the scope the duty to defend under a client’s policy.