Are your temporary workers covered by your business’s insurance?

Sometimes there just aren’t enough bodies around to get all the work done that needs to get done. If you find yourself shorthanded, you might be considering taking on some temporary workers from a staffing agency. This is a mutually beneficial arrangement – the employee gets some work, you get an extra set of hands to help out, and you save yourself the trouble of having to go through the hiring process to find someone.

But the problem is that since your temporary workers are only temporary, they might not be covered by workers’ compensation insurance. So what would happen if they, say, fell off a ladder? Fell down a flight of stairs? Slipped on a wet tile floor in the break room? The point is that it would be hard to know who’s responsible for covering the medical bills, or the legal costs if they decide to sue.

Anyways, the point is that you need to make sure that you completely understand the relationship between the worker in question and the staffing agency. How the staffing agency classifies them (as a W2 employee or a 1099 worker) affects how they are – or are not – covered by workers’ comp or general liability insurance.

So. With that lead-in behind us, let’s jump in.

Is the worker covered under the staffing agency’s workers’ comp?

A temporary worker is someone who is sent to a company by a temp agency as a short-term replacement for a permanent employee. They can also be sent to meet a business’s needs if their workload goes up. Employees who work for a staffing agency might be considered W2 employees, meaning that they should be covered under the staffing agency’s workers comp. But they might be considered a subleased worker or contractor with 1099 status, meaning that they most likely would not be covered under the staffing agency’s workers’ comp.

If the staffing agency doesn't take on workers' comp responsibility for the temporary workers, you might have a coverage gap.

You have to check and make sure that the employee is covered under the staffing agency’s workers’ comp. If they are, then you’re good – there’s insurance to take on the risk of you bringing them on temporarily. If they’re not, that leads to a problem. No insurance is not a good thing. You need to make sure that you fill gaps in your business insurance coverage.

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What if the worker is not covered under the staffing agency’s workers’ comp?

Then the next question is if the subleased worker is covered under your commercial general liability. Commercial general liability policies protect your company if a third party (for example, a customer or a visitor to your office) is hurt because of negligence or misconduct on part of your business. It’ll cover the costs of the lawsuit and any damages your business has to pay to the injured person. Your general liability, for example, would cover a slipping and tripping lawsuit.

However, your own employees are not covered under CGL (because they have workers’ comp.) That’s why hiring temporary subleased workers gets fuzzy sometimes – those subleased workers might be considered your employees under CGL, or they might not. You need to find out whether that subleased employee would be covered under your CGL. This might require a little digging and studying of your CGL policy, or maybe even a call to your agent.

But that detective work is worth it because if the temporary worker is not covered anywhere – not under the staffing agency’s workers’ comp, not under your workers’ comp, not under your CGL – you could be liable for any injury or accident that they sustain while they’re working for you.

Bottom line…make sure you’re covered.

The point that we’re trying to make is that you need to make sure that those temporary workers or subcontractors are covered someway, somehow. The gap in coverage that could exist leaves your business wide open to a huge loss. Make sure that you completely understand the contract that you have with the staffing agency and that you know what kind of coverage your temp workers do or don’t have.

You need to find if how your temporary workers are covered.

You can always talk to your agent to help you out with the nitty gritty of the coverages for your temporary workers, and they can help you find a suitable solution. Each policy is different, each business is different, and each contract is different, which is why it’s important to make sure that you know all of yours inside and out.

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