While staffing agencies are an effective solution for companies looking for reliable short-term employment help, they are not immune to liability and risk exposures for workplace issues. In fact, in some cases, a client is exposed to liability as a result of using a temporary staffing agency.
How to Reduce Risk Exposure in Workers’ Compensation
First, companies should review the contracts they use. The contract between the staffing agency and the client should spell out that the agency will defend the client for any losses, penalties and attorney’s fees in relation to the staffing agency’s employees. This can include wage-related claims. What’s more, the contracts should contain representations by the staffing agency assuring the client that the staffing agency will perform its duties to its employees.
Next, there should be an emphasis on due diligence by all parties. Clients should feel encouraged to look into a staffing agency’s record as a place that supplies quality jobs and operates with integrity. But a staffing agency can also do its own research and get to know the potential client better through contacting references. This can help them get a clear picture as to the possibility that the client may be a risk to bring on.
Another important thing to cover is proof of insurance. Staffing agencies should carry specific insurance coverage for staffing agencies. Usually, a staffing agency will maintain Employment Practices Liability insurance (EPLI), naming the client as an additional insured party. The client may want to exercise some oversight of a staffing agency’s compliance with laws, but by becoming more involved, the client may be looked at as a joint employer of the workers retained through a staffing agency.
Staffing agencies have to do their part to take as much caution as possible when considering workers’ compensation liability. Agencies are usually seen as defendants in harassment lawsuits, for example, when it comes to alleged wrongful conduct that happened on the premises of the client. Staffing agencies should make sure that their clients have anti-discrimination policies and practices in place and correct any improper activity as quickly as possible.
About Monarch Partners Group, LLC
For more than 30 years, Monarch Partners Group (MPG) and affiliate Nationwide Employer Services LLC have focused on providing Workers’ Compensation insurance solutions for distressed risks and industries. Our long-term history and expertise in the space and market sources enable us to find solutions for business owners and brokers that they may otherwise not have access to. We write Workers’ Compensation coverage for all types of risks in all states with solutions that Employer Organization (PEO), Employer Of Record (EOR) and Captive Insurance programs. To learn more about our products and services, contact us today at (855) 435-5153.