Staffing Agency Liability: Placing Independent Contractors
Independent contractors are a vital part of the modern economy and many industries are turing to these professionals for all sorts of different services. From design and artistic consultation to engineering, construction and other skills, independent contractors offer valuable expertise for temporary services and projects. However these workers have their own unique classification, rule and regulations which are constantly under scrutiny and revision due to new policies. As more companies implement contingent worker programs as part of their overall business strategy, staffing agencies are seeing increased demand for these professionals. As such, it is important to make sure that staffing agents and their clients are protected against common loss and liability exposures.
It is important to keep in mind that a staffing agency’s relationship to the independent contractor will highly impact their obligations and liability exposures. For example, if the agency is working with the contractor to find them work, there are different obligations than if the agency is enlisted by a business to help fill an open position or find a qualified contractor to take on a project. When working with a business, the has a responsibility to also advise their client on some of the nuances of working with independent contractors.
First and foremost, Affordable Care Act (ACA) compliance is crucial. In most cases, a valid independent contractor should not receive health insurance from either the staffing firm or the host company. Experts suggest that the contractor’s agreement should include specific provisions which outline the relationship to all parties and explicitly state their status as an independent agent. This will protect both the staffing agency and the host company from exposure to penalties for misclassification and allegations from the contractor of failure to offer them health insurance.
There is also the issue of intellectual property and project ownership when it comes to the work preformed by and independent contractor. By default, any intellectual property created by the independent contractor belongs to that individual or firm, unless the contractual agreement specifically states otherwise. Many companies do not realize that unless there is very specific language within an independent contractual agreement that assigns ownership of all intellectual property and work preformed belongs to the host business, all work completed is the property of the contractor. This can create confusion and lengthy legal battles which can be problematic for staffing firms or their clients who are enlisting such services. When crafting contracts with independent contractors it is important to make sure an agreement is reached between all parties about work product ownership in advance of the project.
As regulatory agencies increase their scrutiny of businesses working with independent contractors, it is vital that staffing agencies attain complete liability coverage. At World Wide Specialty Programs we understand the unique and unpredictable nature of the staffing industry. That’s why we specialize in ensuring that staffing industry members attain the insurance coverage they need to succeed. We proudly offer a comprehensive portfolio of staffing industry insurance solutions to help brokers secure everything from EPL to staffing professional liability coverage for their clients. Give our staffing agency liability specialists a call today at (877) 256-0468 to learn more about all our products and solutions.