Last month, reports began to surface regarding the arrest of two New Jersey staffing firm owners on charges of improperly reporting employee data, hiding income and tax evasion and worker’s compensation fraud. According to the New Jersey Office of the Attorney General, the husband and wife duo were owners of a New Jersey based temporary staffing company which provided staffing services throughout the state. Authorities reported that the investigation into their business practices began when their insurance carrier reported their case to the New Jersey Office of the Insurance Fraud Prosecutor, after which time a lengthy investigation uncovered evidence that the couple had been hiding over $30 million in income from the IRS as well as under reporting their number of employees and underpaying their worker’s compensation premiums and income taxes.
Employee crime is a constant concern, especially for the temporary staffing industry which deals with high turn over rates and thousands of employees passing through each year. Over the last year alone there have been numerous reports of increased business crime exposures and activity from both the management and employees. In fact, last September the Federal Bureau of Investigation (FBI) and the Department of Homeland Security issued a public warning of an increase in computer network exploitation and disruption by disgruntled or former employees.According to the FBI, the total cost of non-healthcare related insurance fraud is estimated to be more than $40 billion per year. Yet many American businesses don’t expect their management or coworkers could ever be involved in intentional wrongdoing.
Theft by employees is one of the most prevalent and costly problems faced by American organizations both private or public. Most common criminal activities include the removal of products, supplies, materials, funds, data, information, or intellectual property. Experts estimated that losses due to employee theft can range from $20 to $90 billion annually for minor criminal activities, to upwards of $240 billion a year when accounting for losses due to intellectual property theft. In many cases, business owners are actually less likely to be involved in fraudulent or criminal activity, because management, other executives (directors, officers, etc), and employees often stand to gain more from poor reporting, theft, or shady business practices.
When it comes to protecting staffing agencies from criminal activity and resulting losses, there is often much to consider in terms of loss exposures due to intellectual property, trade secrets, data and business practice. As such, staffing agencies need employee crime coverage. At World Wide Specialty Programs, we specialize in providing quality staffing industry insurance solutions to staffing, recruiting and employment firms. We offer Staffing Agency Crime Insurance Coverage to both 1st and 3rd parties, protecting the insured and their client from dishonest acts committed by the insured’s employees. This includes defense and legal liability, coverage for theft of trade secrets, along with expenses from a security breach. To learn more about our operation and all our staffing industry insurance solutions, contact us today at (877) 256-0468.