Meet Expectations With a Staff Insurance Policy

Staffing agencies seem to be everywhere these days, for good reason. Not only do these organizations connect qualified employees with good employers, they help companies avoid many of the costs and stresses associated with recruitment and retention. Of course, they also face legal liabilities that other types of businesses easily avoid. If you own a staffing agency, purchasing staffing insurance is an effective risk-management strategy.

Comprehensive Insurance Coverage

Staffing agencies need unique insurance. By working with a qualified insurance agent, you can better gauge risk and successfully limit it. To start, however, you may consider purchasing the following types of general business insurance:

  • General liability
  • Property insurance
  • Workers’ compensation
  • Automobile coverage

After purchasing regular business insurance, you may want to add coverage that is tailored to your specific needs. For staffing agencies, coverage usually includes professional liability insurance, fiduciary duty coverage, and director and officer protection. Since you are likely not an insurance expert, you probably want to leave the technical reputable to an experienced insurance agency.

Because employers have a choice when it comes to collaborating with a staffing agency, you want to do what you can to establish your agency as a leader in the industry. By purchasing staffing insurance you not only protect your organization from legal harm, you legitimize it in the eyes of prospective clients.

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Insurance Required for Temp Employees

The use of temporary staff can be a great resource for companies of all types and sizes as a way to fill voids in the everyday workforce. Due to the nature of the business, staffing insurance is purchased as a way of protecting the staffing agency in the event the employee becomes injured on the job, or is responsible for some type of loss as a result of a mistake or error made.

Most companies upon determining that a temporary employee is needed will seek out a staffing agency based on which entity is able to deliver the best candidates. However, any business relationship with a staffing company should be carefully reviewed given that clients of temporary employees are placed in a co-employment relationship with the agency of their choosing.

Concerns the should be addressed

There are certain risk management issues that are inherent in staffing, such as whether the chosen recruiter is representing the best agency for your personnel needs, and is the agency’s workers’ compensation plan and staffing insurance adequate in the event of an accident or injury. Furthermore, does the agency have adequate new hire materials to protect the organization and what are the agency’s qualifications regarding human resource education and training?

There are many considerations involved in evaluating the agency assigned with this task. A staffing firm should be in charge of maintaining all employment-related records and also provide a handbook and any essential training to its employees regarding key labor and employment issues.

Temporary employees may be exposed to sensitive and confidential material while on assignment. A confidentiality agreement allows the agency to address the importance and seriousness of maintaining confidential information and can assist with risk management requirements of clients, such as liability and malpractice insurance coverage criteria.

In addition, state and federal employment laws require employers to have a policy that addresses harassment issues. Laws are also in place requiring employers to have a formal safety policy known as an Illness and Injury Prevention Program. New hires should be given a complete written program that addresses safety and accident reporting procedures.

In the event of a claim, an arbitration agreement can help to manage the cost of any litigation procedures. Finally, a client benefit waiver acknowledges that a temp employee is employed by the staffing service for benefit plan purposes and that the employee is eligible only for such benefits as the staffing service may offer to its employees.

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Workers Comp Coverage for Temp Employees

For the most part, workers’ compensation guidelines for staffing agencies, or employers, are the same as if they were permanent employees, except when it comes to paying insurance premiums. The temporary staffing industry is responsible for ensuring that each employee it sends on a job is covered for accidents, injuries or illnesses with the proper amount of staffing insurance as outlined by state laws.

Jobs classification

Jobs are classified by a risk classification under workers’ compensation, and as an owner of a staffing agency should know, this is coupled with the type of work the temp employee is being asked to perform. For example, providing office workers is much less of an insurance risk than providing workers for warehouse duties. Each job must be classified according to the risks associated with the job in order to ensure the correct amount of insurance coverage has been obtained.

Accurate recordkeeping is important

Temporary staffing agencies must also keep accurate records of all temp workers. This includes where the employee worked and for whom, the type of work being performed, the number of hours completed, and the rate of pay. This information is vital for setting the premium rates for your workers’ compensation insurance. Records should contain the employee’s name and social security number, along with a date of hire, job title, termination date, compensation type (such as hourly or commissioned salary), payroll deductions, gross pay and job classification.

Workers’ compensation premiums for temporary staffing agencies continually change based upon the number of workers in a given period and the number of hours that they’ve worked. For commissioned employees, staffing employers might need to choose between the actual number of hours worked or assume an eight-hour, five-day work week for calculation purposes.

Most staffing agencies use a work order system to provide services to companies that need temp workers. The work order, or job order, is the request made by the prospective employer to the temp agency. Work orders must be made for each employee on assignment to ensure accurate workers’ comp coverage.

Injuries and accidents are an unfortunate part of running a business, and your staffing insurance provides for employees unable to work due to on-the-job incidents that result in the temporary or permanent disability. Not having a policy is not only negligent but in most states, it is also illegal. Speak to an agent about your requirements regarding coverage.


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