Staffing agencies have distinct insurance coverage needs, since they occupy such a unique niche. It can be easy to think that employment practices liability insurance is one form of coverage that staffing agencies do not need. However, since staffing agencies directly hire the workers they send to clients, they can benefit from this coverage. In fact, this coverage is critical considering the following risks.
Liability for Host Company Actions
Staffing agencies have a responsibility to confirm that their clients abide by employment practices laws. Ignorance is not a valid defense against an employment practices liability claim. If a client engages in harassment, discrimination, or other unlawful practices, the staffing agency may be held liable. Since it is not feasible for most staffing agencies to actively check up on every client, taking out a strong insurance policy is the surest form of protection.
Agency Mistakes or Misperceptions
Staffing agencies are not completely immune to the risk of poor employment practices, either. Small mistakes during the interview and hiring process may give the appearance of discrimination or other unfair practices. Issues with the employee’s contract or the agency’s representation of the work could also provide grounds for a claim.
Finding an Optimal Policy
Staffing agencies can benefit from working with an insurance company that specializes in the staffing industry. Such an insurer will be better equipped to provide an optimal solution along with other valuable services, such as advice on proactively managing risk.