{"id":4494,"date":"2026-05-06T21:17:51","date_gmt":"2026-05-06T21:17:51","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/qui-tam-wage-and-hour-action-not-an-employment-claim-and-thus-no-duty-to-defend-wiley-rein-llp\/"},"modified":"2026-05-06T21:17:51","modified_gmt":"2026-05-06T21:17:51","slug":"qui-tam-wage-and-hour-action-not-an-employment-claim-and-thus-no-duty-to-defend-wiley-rein-llp","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/qui-tam-wage-and-hour-action-not-an-employment-claim-and-thus-no-duty-to-defend-wiley-rein-llp\/","title":{"rendered":"Qui Tam Wage\u2011and\u2011Hour Action Not an \u201cEmployment Claim\u201d and Thus No Duty to Defend | Wiley Rein LLP"},"content":{"rendered":"
\n

The U.S. District Court for the Central District of California, applying California law, held that an employment practices liability insurer owed no duty to defend a qui tam action alleging prevailing-wage violations because the claims were not brought \u201cby or on behalf of an Employee\u201d and therefore did not involve a covered \u201cEmployment Claim\u201d and, with respect to the employee-based claim, did not allege a covered \u201cEmployment Practices Wrongful Act.\u201d Shimmick Constr. Co., Inc. v. Arch Specialty Ins. Co.<\/em>, 2026 WL 1048234 (C.D. Cal. Mar. 4, 2026). The court further held that, even if the insuring agreement were satisfied, coverage was independently barred by the policy\u2019s wage-and-hour exclusion.<\/p>\n

The insured construction company tendered defense of a California qui tam action alleging that it violated prevailing-wage and apprenticeship requirements and submitted false certifications in connection with public works contracts. The action was brought by public entities and qui tam relators seeking statutory penalties and equitable relief. The complaint also included a claim on behalf of an individual employee for alleged underpayment of wages. The insurer denied coverage on the grounds that the action did not allege a covered \u201cEmployment Claim\u201d and was barred by the policy\u2019s wage-and-hour exclusion. The insured subsequently filed suit seeking defense costs and asserting causes of action for breach of contract and bad faith.<\/p>\n

The court first held that the qui tam claims were not covered because they were brought by governmental entities and qui tam relators, not \u201cby or on behalf of an Employee,\u201d as required by the policy\u2019s insuring agreement. The underlying complaint alleged violations of California prevailing\u2011wage and labor laws based on the insured\u2019s alleged false certifications in connection with public works contracts and sought statutory penalties and equitable relief. Because these claims sought recovery for governmental contractual and statutory interests, not any employee\u2019s interest, they did not qualify as covered \u201cEmployment Claims\u201d under the policy.<\/p>\n

The court next addressed the claim asserted on behalf of an individual employee and held that it likewise did not trigger coverage because it did not allege an \u201cEmployment Practices Wrongful Act,\u201d which the policy defined to include specified categories such as employment contract breach, discrimination, retaliation, wrongful termination, or other enumerated employment\u2011related misconduct. The court explained that allegations of statutory underpayment of wages, without allegations of discrimination, retaliation, or breach of an employment contract, fell outside that definition and therefore also did not constitute a covered \u201cEmployment Claim.\u201d<\/p>\n

Finally, the court held that, even if the insuring agreement were satisfied, coverage was independently barred by the policy\u2019s wage\u2011and\u2011hour exclusion, which excluded claims arising from alleged violations of wage\u2011and\u2011hour laws. Accordingly, the court granted the insurer\u2019s motion to dismiss and held that no duty to defend was owed, while granting the insured leave to amend to pursue an alternative third-party liability theory.<\/p>\n

[View source.]<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The U.S. District Court for the Central District of California, applying California law, held that an employment practices liability insurer owed no duty to defend a qui tam action alleging prevailing-wage violations because the claims were not brought \u201cby or on behalf of an Employee\u201d and therefore did not involve a covered \u201cEmployment Claim\u201d and, […]<\/p>\n","protected":false},"author":1,"featured_media":4495,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[384,389,1428,1225,3301,2132,3298,2796,3299,3300,2795],"class_list":["post-4494","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-action","tag-claim","tag-defend","tag-duty","tag-employment","tag-llp","tag-qui","tag-rein","tag-tam","tag-wageandhour","tag-wiley"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/4494","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/comments?post=4494"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/4494\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/4495"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=4494"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=4494"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=4494"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}