Securing an effective workers’ compensation plan for temporary staffing may pose a challenge, confusing some staffing agencies as to how it differs from full-time insurance. However, workers’ compensation guidelines for staffing agencies are essentially the same for permanent hiring needs, save for paying insurance premiums.
The temporary staffing industry is responsible for making sure that each temporary employee it sends out on a job is covered with the right amount of workers’ compensation insurance based on what kind of job they’re completing.
Here’s a better look at workers’ compensation insurance in the staffing agency industry, illustrating why it’s a crucial component to have.
Workers’ compensation partially depends on the risk classification that jobs are classified by. A temporary staffing agency must know the kind of work the employee will be performing on a temporary basis in order to better understand the risks involved.
For instance, office workers who are hired to help out with processing accounting projects are at less of a risk of getting injured than someone who is hired to help out on a construction project. Each job must be classified according to the specific risks associated with it to make sure the correct amount of workers’ compensation coverage is in place.
Workers’ compensation premiums for staffing agencies change on a regular basis. This is due to the fact that the number of workers changes in a given period and the number of hours they work can fluctuate as well. This requires reporting the hours worked for any and all employees, including those paid on a salary basis.
For commission employees, a staffing agency may need to choose between the number of hours worked in earnest or assume a 40-hour workweek calculation.
Most staffing agencies use the work order system to supply the right services to companies that need a set amount of niche employees. The work order is the request that has been made by the prospective employer to the temp agency. Work orders have to reflect the number of employees on temporary assignments to ensure correct and detailed workers’ compensation coverage.
Work orders should include pay rate information, job classification, number of employers the agency can provide, and job start date.
It’s important that temporary staffing agencies keep accurate records of where the employee has worked, the kind of work they performed, the rate they were paid, and the number of hours they completed on a job. This information is boilerplate information and is needed to set the premium rates for the workers’ compensation insurance.
Records should include the employee’s name, Social Security information, date hired, job title, compensation type, payroll deductions, and job classification.
In some cases, a client of a temporary staffing agency may be hired directly to the company instead of taking on a temporary role. If an employer elects to hire someone directly through a staffing agency, they must provide workers’ compensation insurance coverage for the worker under the stat’s guidelines.
Each state manages its own workers’ compensation programs, so it’s important to review your specific state’s labor department rules to ensure they are being followed. In most instances, temporary workers are treated the same as permanent workers, save for the benefits related to working full-time.
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. Our success is reflected in the $900 million in payroll in our programs. We write Workers’ Compensation coverage for all types of risks in all states with solutions that include the Standard Markets, Administration Service Organization (ASO), Professional Employer Organization (PEO), Employer Of Record (EOR) and Captive Insurance programs. For more information, give us a call today at (855) 435-5153.