Obtaining workers compensation for staffing agencies doesn’t have to be tricky. Choosing the right broker will ensure your temp employees have coverage while also keeping your premiums low.
Are you looking for affordable workers compensation for staffing agencies?
It may have surprised you to learn how tricky it is to buy a policy. And if you do manage to find a plan, you may end up paying more than you expected. Many insurance companies avoid covering staffing firms, but that doesn’t mean you should go without coverage.
Coastal Work Comp Brokers knows how to find the right insurance coverage for small and medium-sized businesses.
We work with a variety of specialty niches, including staffing agencies and temp firms. And we know how to get you the lowest premiums on the market.
Why Do Staffing Agencies Struggle to Buy Workers’ Comp?
In today’s society, temp workers are more popular than ever. Many of these workers simply enjoy the flexibility that contract jobs offer. However, just because someone finds work through a staffing agency doesn’t mean they shouldn’t get workers’ compensation.
You never know when an on-the-job accident may occur. That’s why temp agencies should purchase professional staffing services insurance to cover all of their workers. Even though your employees head to another company each day, any workers’ comp claims still fall in your lap.
Staffing agencies send their workers to jobs in many different sectors regularly. This revolving door of jobs and employees can cause a lot of headaches when the time comes to buy workers’ comp. Many insurers will simply toss your application in the trash without giving it a second thought.
Why is that?
In the minds of insurance companies, staffing agencies pose a higher risk than other industries. Not only do their workers head to a variety of jobs each day, but the companies that hire them may not provide safe work environments.
You also have to consider the class code system. The National Council on Compensation Insurance (NCCI) uses four-digit codes to classify every job. The higher the class code, the riskier the job. And the riskier the job, the higher the insurance premiums.
While it’s easy to determine the class code for most companies, it’s a lot trickier to figure them out for staffing firms. That’s because temp agencies often contract with companies from a variety of industries.
When purchasing a workers’ comp policy, the agency must list the class code for every job they fill. There’s a lot of room for error.
Common Workers’ Comp Problems Faced by Staffing Agencies
There are many reasons why insurance companies turn down staffing agencies that need workers’ comp coverage. Most don’t want to deal with a ton of ever-changing class codes. And although State Fund will offer a policy, they have the highest premiums around.
Coastal Work Comp Brokers wants to make it easier for staffing agencies to get the workers’ comp coverage they need.
We work with a variety of businesses, including those:
- In high-risk industries
- Facing non-renewal by their current insurance carrier
- Dealing with a gap in coverage
- With a high experience modification rating
- Trying to avoid a large deposit
- That want to eliminate annual renewal audits
- With extensive workers’ compensation losses
Whether your staffing agency employs 5 or 500 workers, we know how to find the best, most affordable coverage for you. We can help you reduce your current premiums by 30-40%!
You can count on us to be your partner at all times. And if someone ever files a claim, we’ll also help you avoid a lawsuit.
Do Temp Agencies Have Workers Compensation?
All staffing agencies should obtain temporary work insurance to cover any claims. It’s the agency’s responsibility to provide coverage for all of its employees—even temporary ones.
Although these employees will go to work for another company, those businesses are only “leasing” the workers from the temp firm. Therefore, the agency must handle any claims.
However, many companies mislabel their temporary workers as independent contractors (IC). Some even purposely do this to avoid paying for workers’ compensation coverage. But this practice is illegal.
Every state has its own rules on how to classify employees. Mislabeling an employee as an IC could lead to a costly lawsuit. Always double-check the current regulations before assuming a worker is an independent contractor.
Are Temporary Employees Eligible for Workers Compensation?
Every temporary worker is eligible for workers’ compensation if they sustain an injury on the job. It doesn’t matter if the employee is full-time, part-time, hourly, or salaried. All temp workers should receive the same coverage as someone who works permanently for a company.
But there is often confusion about who will cover the temporary employee. After all, the temp firm placed the worker in a position with another company. And the worker may work alongside permanent employees and perform the same job duties.
So, who should buy temp staffing workers comp–the staffing firm or the other company? The staffing agency that placed the employee should provide the coverage, not the company where they work each day.
What Does “Alternate Employer” Mean?
Alternate employers are companies that fill positions using job placement services. These services include staffing agencies or temp firms. The agency locates the best employee and places them with the contracting company.
Whenever an agency sends over a worker, that person remains an employee of the agency, not the company where they perform their job duties.
For example, if a delivery company needs to hire extra help during the holiday season, they may use a staffing agency to fill the open positions. The agency finds temp employees for the delivery company.
Even though these workers will report to the delivery company for work, they are still employees of the staffing agency. Therefore, the delivery company becomes the alternate employer.
Hiring temporary employees often creates confusion in the event of an on-the-job injury. An injured worker could sue the alternate employer for damages if the temp staffing workers comp policy fails to list them.
What Is the Purpose of the Alternate Employer Endorsement?
Sorting out workers’ compensation claims that involve temporary employees can get complicated. Even though the staffing agency carries the workers’ comp to cover the employee, the worker may try to sue their alternate employer.
To prevent this, the alternate employer needs to have the agency add them to the workers’ comp policy’s endorsement schedule. The purpose of an alternate employer endorsement is to protect the hiring company from legal recourse if an employee gets hurt.
It remains the staffing firm’s responsibility to settle any workers’ comp claims. As long as the hiring company remains listed on the alternate employer endorsement, the temp worker cannot make a claim against them. The claim must go through the staffing agency.
What Is a Borrowed Servant Endorsement?
A borrowed servant is any worker who temporarily lends their talents to another company. These workers often come from employment agencies. There is a legal doctrine known as the Borrowed Servant Rule. According to this rule, any special employer (alternate employer) can be liable if the borrowed servant gets injured on the job.
Because of the Borrowed Servant Rule, it’s more important than ever for employers to seek out an alternate employer endorsement.
Some insurance agencies refer to it as the borrowed servant endorsement. As long as the special employer remains named on the policy, they will not be liable for any workers’ compensation claims.
What Is a Voluntary Compensation Endorsement?
There are a number of employees who may be exempt or excluded from traditional workers’ compensation plans. The government considers them to be voluntary workers, even if they get paid.
These employees may include:
- Casual or seasonal workers
- Farm or agricultural workers
- Independent contractors or sole proprietors
- Domestic workers
- Employees traveling overseas
- And many more
While it’s not necessary for staffing companies to provide coverage to these workers, it’s still wise to do so.
The NCCI offers the Voluntary Compensation Endorsement to extend workers’ comp to these casual workers. This endorsement protects your agency from legal action if the worker sustains a bodily injury by either accident or disease.
Finding the Right Coverage for Your Staffing Agency
Many staffing agencies run into a brick wall when they try to find workers’ comp coverage. Some private insurance companies don’t want to deal with the added paperwork involved. And State Fund may charge a small fortune to buy a plan. Furthermore, the annual renewal audits often find the agency owes more even money.
Those who want to get great coverage without overpaying should look into a PEO for staffing companies.
Here at Coastal Work Comp, we’re not afraid to work with temp agencies. We will help review your case to determine the right plan for you. Even if you deal with a handful of class codes, it’s no problem for us.
We offer pay-as-you-go coverage so that you can say goodbye to annual audits for good. Our goal is to match you with the best workers’ comp policy with the lowest premium available.
If you want to move away from the State Fund, we can help. We specialize in all types of high-risk industries. Our team can even help if you have a high experience modification rating or lapse in coverage. New ventures and those needing multi-state risk coverage are also welcome.
The brokers at Coastal Work Comp Brokers know how to locate the right workers’ comp plan for temp firms of all types.
Call 323-543-4141 for expert help in finding the best workers compensation for staffing agencies.