Make Sure Your Temp Employees Are Covered Wherever They Work


Make Sure Your Temp Employees Are Covered Wherever They Work
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Temporary help services supply workers to their clients’ businesses for limited periods of time to help the client supplement its workforce or fill temporary openings. Individuals provided to clients are employees of the temporary placement service — not the client. The client provides direct supervision of the temporary personnel while they are at the client’s worksite.

Temporary help services do not include farm labor suppliers.

Temporary staffing services are in the unique position of employing individuals who temporarily work for other businesses at their worksites. You may provide only certain types of employees, such as these:

  • Bookkeepers

  • Computer/IT professionals

  • Hospitality workers

  • Janitorial workers

  • Light industrial workers

  • Unskilled manufacturing or warehouse workers

  • Clerical workers 

As these workers perform widely varying jobs in different locations, you retain responsibility and liability for the actions of those employees even while they are at client worksites. In addition, you remain responsible for protecting temporary employees from workplace injuries, illnesses, and discrimination.

Most business insurance policies are written specifically to cover property damage, bodily injury, crime and other losses that occur on your business premises. You need temporary staffing insurance policies that protect your financial interests and your employees wherever they are sent to work. Your temporary agency insurance must protect your business when employees you provide cause property damage, steal or otherwise cause harm to one of your clients.

A knowledgeable Trusted Choice® insurance agent can help you avoid gaps in coverage when your temp employees are working off-site. Your agent will help you properly classify your business for insurance purposes to ensure that appropriate coverage is provided no matter where your employees are. Most of your policies must be written to specifically include (or remove exclusions for) the actions of your employees while they are working at a client site or while using client equipment, machinery or computers.

Important Insurance for Temporary Staffing Firms

Commercial general liability (CGL) insurance:

This covers third-party bodily injury and property damage claims that may arise. Your CGL policy must classify your business as a temporary staffing agency (not an employment agency), and coverage should be extended to damage caused by a contract employee while on assignment for a client. If, for example, an employee in a temporary position damages a client’s property while working, your CGL policy responds; you continue to be responsible for the employee’s actions while he or she is working elsewhere.

Employee theft and crime coverage 

This protects your temporary staffing firm from the costs of theft, dishonesty and fraudulent acts committed by an individual employee or a group of employees. A basic standalone employee theft and crime policy provide coverage for forgery, alteration, theft, unauthorized electronic funds transfers, credit card fraud, computer fraud, money order fraud, and counterfeit fraud.

Most crime policies specifically cover money or other property owned or held by your business. When you provide employees who work at clients’ businesses, it is their property and money that are at risk. If you place a bookkeeper in a temporary position and that employee embezzles money from your client, your crime policy must include an endorsement for theft of client property in order for it to provide coverage.

Employment practices liability insurance (EPLI)

This protects your temporary staffing agency from claims of discriminatory employment practices (e.g., sexual harassment, wrongful termination) by prospective, current or former employees. EPLI for temporary staffing agencies should cover both your in-house employees and your contract employees who are placed with clients and are subject to a client’s work environment. 

Professional liability insurance or errors and omissions (E&O) coverage

E&O coverage protects the staffing agency from lawsuits that arise if you are negligent in your professional services and cause financial harm to a client. For example, you can be sued for professional negligence if you:

  • fail to perform appropriate background checks.

  • fail to provide qualified personnel.

Professional liability insurance coverage for temporary staffing agencies protects you from the costs associated with a lawsuit for professional negligence. It may cover your defense costs, including attorney fees and court costs, as well as settlements or judgments that you are required to pay. Insurance companies offer a variety of specialized policies that are customized for the particular risks faced by certain professionals. Coverage is excluded for instances of intentional wrongdoing.

Temporary Staffing Service Workers’ Compensation Insurance 

Workers’ compensation insurance

This provides insurance coverage when accidents happen at the workplace. It ensures that the injured worker gets medical care and income protection while unable to work.

Workers’ compensation insurance provides benefits to injured workers regardless of who is at fault for their injury. And it provides death benefits for an employee’s dependents if a worker is killed. Workers’ compensation laws vary in each state; each state sets rules for the number of benefits an injured employee is entitled to, the impairments or injuries that are covered, the method of evaluating impairments and the method of delivering medical care. 

Temporary staffing agencies have unique workers’ compensation concerns. You must provide workers’ compensation insurance for your in-house employees, as well as for the temporary workers that you place with other firms.

An employer’s workers’ compensation insurance premiums are based on its industry risk classification and payroll, with premiums for more dangerous businesses higher than for those that are deemed safer. Because a temporary staffing agency has employees working in a variety of different positions at different times, calculating appropriate workers’ compensation premiums and ensuring appropriate coverage can be difficult.

Temporary staffing agencies must be aware of the risks associated with each type of job that they fill. Each employee must be covered with the correct amount of workers’ compensation insurance for the job being done. You must keep meticulous records of job classifications, salaries, hours worked and applicable work orders in order to ensure appropriate coverage and premium calculations for all workers.

Other Temporary Staffing Agency Insurance

Talk to your Huttenlocher Group insurance agent about your need for these addit