Explaining Workers’ Compensation Insurance for Staffing Firms

Posted June 18 2015


workers' compIt’s no secret that in today’s world, it is becoming increasingly more difficult for people to find a job. With jobs being lost to technology, going overseas, companies downsizing, and a great population of qualified candidates, people are turning to any resolution they can find. Thus, making staffing firms more and more popular, especially with more and more companies looking for temporary workers. 

 

It Can Be Difficult 

Staffing firms employ such a large amount of people, who perform various tasks ranging from nursing, to working in a warehouse or on an assembly line. Another reason is that there is great turnover, so it can be hard to keep track of every single detail that is required when applying for a workers’ comp policy. Luckily, you aren’t required to pay the same premiums for temporary workers as you do for full time employees which can help to keep your costs effective. 

It’s the Law! 

Many state and federal jurisdictions require the staffing firm of a temporary worker to cover their workers’ compensation insurance. This may be because most states consider the temporary worker to be an employee of the staffing firm, rather than an employee of where they are placed. With that being said, if a workers’ comp claim happens to be placed, the responsibility again is placed on the staffing firm. 

Risk, No Reward 

Workers’ compensation usually classifies jobs by risk. This means that a staffing company should be aware of the work, tasks, and duties that a worker will be performing in order to get a good understanding of the risks that will go along with the job. The purpose of this is to ensure that the worker(s) will have the right amount of coverage. For example, a person working in a shipyard may need more coverage than a person working in an office. 

Keep the Necessary Documentation 

The premiums for a staffing company are regularly changing because of variable factors such as the number of workers and hours they work in a given period. This makes it very important for staffing firms to keep good records of where the placed employee worked, what kind of work they performed, how many hours they worked, and the rate at which they were paid. This is important because it can dictate the premium rate that the firm will have to pay. Some examples of other records that firms should be keeping are name, Social Security information, job title, date hired, date terminated, and compensation type (salary, hourly, commission). If you are looking to get a workers’ compensation policy, you may be required to produce several different documents such as business plans, financial statements, 3 or 5 year loss runs, safety policies, etc.

Workers’ compensation insurance should be a top priority for all businesses. If you would like more information on workers’ comp, read our previous blog, “How to Save Money on Workers’ Compensation Insurance.” Or, if you are about to experience a workers’ compensation audit, read our blog “Follow These Tips When Preparing for a Workers’ Compensation Audit,” to help you prepare. If you have any questions, or are interested in purchasing Workers’ Compensation Insurance, other types of business insurance, or group health insurance for your employees, please contact us at 954-828-1819 or visit us online at mhginsurance.com. Our insurance specialists have the knowledge and experience to cover your company’s risks appropriately.