Inside Crime Risks of Staffing Agencies

The staffing industry is tasked with supplying workers to other companies needing to fill positions on what is normally a temporary basis. Because of certain unique liability exposures, they need to supplement their staff insurance policy with additional coverage for instances not frequently covered under a standard insurance policy.

One exposure faced by temp agencies that must be considered when purchasing staff insurance is a crime or fidelity policy. Crime insurance protects organizations from loss of money, securities or inventory resulting from employee dishonesty, embezzlement, forgery, computer and wire transfer fraud, all of which can be of great concern.

Initiating fraudulent acts

One way that a dishonest employee can siphon funds out of an organization is through the use of fictitious accounts and. They may also create invoices to non-existent suppliers. Generally, an employee is often found guilty of simply stealing money, securities or property at their disposal. These scenarios, actually quite common, are geared to take advantage of potential weaknesses in a company’s financial controls.

While employees are primarily supervised at locations owned by the agency’s clients, the agency remains liable for their actions. People who look for work at temp agencies are often between jobs and are hard-working individuals trying to support their families. Still, someone with ulterior motives may apply for a job in order to get a position at a place of business for the sole purpose of committing a crime. Since their employment is only for a short period of time they’re hoping to avoid detection.

The interview process, along with reference checks, is designed to weed out undesirables; still, some are clever enough to present themselves in a good light. With a clean record and solid references, they could easily pass the interview and gain access to unsuspecting clients.

Once hired, a temp employee may attempt to access personal information of clients and employees, selling anything of value to another party, including credit card and social security numbers. If the theft is traced back to the temp worker they could face prosecution, a risk they are obviously willing to take. Without staff insurance to address criminal acts, the loss could wind up being costly with the temp agency is responsible for the actions of their employee. Speak to an agent and don’t allow yourself to do business without this vital coverage.

 

How Experienced Insurance Agents Help Staffing Agencies

Running a staffing agency can be a lot of work. Connecting the right employees with prospective employers can take a tremendous amount of concentration and effort. It can also be stressful, as staffing agencies often face legal liabilities that other companies easily avoid. Here are some ways an experienced agent makes buying staff insurance easier.

Market Understanding

By working with an agent who understands the staffing market, business owners get access to the sort of essential information they need to make an informed insurance purchase. Experienced agents can also usually spot holes in coverage and recommend different insurance strategies.

Customer Service

The best insurance agents understand how to cultivate a business relationship. As such, they are always willing to answer questions or research topics. When business owners work with these agents, they frequently express greater satisfaction with the staff insurance buying process.

Comprehensive Coverage

In insurance, combining coverage usually helps business owners save money. Since a staffing agency probably needs a general policy, property insurance, workers’ compensation coverage and other protections, working with a skilled agent who understands how to combine coverage is often advantageous.

There are many advantages of leaving staff insurance to the pros. Simply put, by working with the right insurance agent, staffing agency owners usually have more time to focus on running their businesses.

 

Choose the Right Insurance Solution for Your Staffing Firm

Staffing firms encounter a unique mix of risks while serving the needs of their clients. Whether it’s their contractors working at client sites, providing PEO or ASO services or meeting the needs of their customers in other ways, the complex natures of their lines of business expose them to multifarious avenues of liability. Securing your firm’s future and ensuring it remains resilient enough to face upcoming challenges requires a custom-built, innovative staff insurance solution.

The Basics of a Staffing Insurance Package

As your staffing insurance agent builds a total indemnity package for your firm, he or she will usually begin with a few basic coverage types:

  • General liability, which usually handles claims of bodily injury and property damage arising from your contract employees’ actions while on assignment
  • Staffing employment practices liability, which shields both your firm and your clients in the case of employment discrimination claims
  • Worker’s compensation coverage, tooled to medical coverage and other benefits to contract employees for injuries occurred during the course of business

Of course, these aren’t the only policy additions your package may incorporate. Your solution may include crime coverage, property and inland marine, fiduciary liability and cyber liability. An expert staff insurance firm should analyze your firm’s distinctive risk picture to supply it with a sophisticated hedging strategy against significant final loss.

Protect Your Employment Agency With the Right Coverage

Running a staffing agency, you are responsible for finding candidates for the right positions at the organizations you contract with. Although you hope every employee will work out for your clients, this is not always the case. Staff insurance protects your organization in the event you are held liable for an inopportune situation.

Situations These Policies Cover

There are three main types of incidences staff insurance covers, and they include the following:

  1. Services provided—This generally refers to the services the staffing agency provides to the client beyond employment.
  2. Work performed—If a contract worker makes mistakes at the business they work for, the staffing agency may be held responsible. Generally speaking, this is the most common form of claim filed against staffing agencies.
  3. Placement—This involves the agency’s inability to find the right candidate for a contracting business.

By acquiring staff insurance, you protect your agency’s best interests and ensure that financial harm is not imposed on your organization in case a client holds you liable for an error.

Obtain a Policy Today

It is never too early or too late to obtain a staffing insurance policy for your organization. Contact an insurance provider in your area as soon as possible if your operations currently lack this essential insurance.

Employment Practices Issues and Staff Insurance

Among the many risks and exposures associated with owning and operating your staffing agency there exists grave concerns over the possibility of claims resulting from employment-related exposures. This can result from the placement of employees in positions under the direction and control of your clients.

It’s important to ensure that your staff insurance coverage includes an employment practices liability (EPL) policy for your agency, and that policy needs to include temporary employees under the definition of employees covered.

Whenever an employment-related lawsuit is filed, due to the fact that the relationship between your agency, the temporary employee, and your client companies is rather complex, it‘s not at all surprising to see the staffing agency and the client company being sued jointly by the claimant.

Most clients agree that EPL insurance is necessary

As a staffing agency, your contract with clients may state that they require you to have an EPL policy to defend against, or cover damages resulting from employment-related lawsuits made against them by your temp employees. In order to cover your agency against such an exposure, your EPL policy would need to be specifically endorsed or extended. While there is an understanding that many suits of this nature are groundless, with employees often accusing managers, co-workers, or staff from either company of discrimination or harassment, defending against these types of claims can be very costly and time consuming. They may even claim that they were denied a job or position that they felt they were qualified for and EPL coverage would help pay court costs in this case as well.

Employment law can be very complex and varies from one jurisdiction to the next. Lawyers, well versed in all aspects of EPL laws, might be able to prove that a case does not have merit. But still, the costs for litigation can be quite high and when a settlement is made in favor of the plaintiff, damage awards can be excessive. With the likelihood that employment law will only become more complex over time, staff insurance that covers employment practices liability issues is a very important component to have.