When staffing your company, you want to be sure you’re fully covered so all work continues to be completed well and on time. And while business is proceeding as usual, you want to be sure you have plans in place in case employees are injured on the job. Any employees you hired directly for your company are covered under your workers’ compensation policy. But what about leased or temporary workers? It’s important to understand the difference so you can protect your company financially and make the best hiring staffing choice to meet your needs.
What are “leased workers” as defined by an insurance policy?
Leased workers are any individuals who have been leased to your company by a labor leasing firm. You’ve signed an agreement with the leasing firm outlining the duties they are to perform, and they are considered employees of your company.
What are “temporary workers” as defined by an insurance policy?
Temporary workers are employees of a staffing agency. They’ve been provided to your company as substitutes for permanent employees currently on leave and will help you meet seasonal or short-term workloads.
What about workers’ compensation vs. a commercial general liability (CGL) policy?
The point you need to be concerned with is what happens if these types of employees are injured on the job. Temporary employees, since they are employed by the staffing agency, are not covered under your workers’ compensation policy. However, if appropriate steps aren’t taken, they could be exposed to your CGL which is never the intent, and an appropriate endorsement of your policy will clearly protect you in the event of an injury.
But leased employees fall into a sort of coverage gap. They’re your employees, so they’re not covered by your CGL. However, if appropriate steps are not taken, they may also not be covered by your workers’ compensation policy either. So what happens if a leased employee is injured on the job? That’s a great question!
What do I need to consider?
If a leased employee is injured at work while employed by your company, you could possibly be sued for negligence since your workers’ comp policy doesn’t cover them. And because CGL coverage also doesn’t apply, you would be responsible for covering any court-ordered damages.
What can you do?
If you’re currently using workers where there is a contract in place with a 3rd party regarding the employment status of the worker, that worker could be considered “leased,” and you need to ensure that injury liability is shifted to the labor leasing or staffing firm. You can do this with an alternate employer endorsement or an extension to your CGL coverage. Whatever you choose, it’s good to have the appropriate protections in place to be sure you’re covered when an injury occurs on the job.
Need help managing your company’s risk?
This and other important topics should be considered to protect your company against financial risk. And Odell Studner can help. We provide consultative services that help companies avoid risk to maintain growth and profitability. To learn more, contact us today!