Staffing firms today face growing exposure to wrongful termination lawsuits, evolving employment laws, and shared liability across client worksites. That reality calls for insurance for employment agencies that reflects how these businesses actually operate.
For insurance agents serving this sector, employment practices liability insurance (EPLI) is a core component of modern risk management. In this article, we’ll break down why EPLI matters, how it works, and what brokers should consider when recommending it.
Why Are Wrongful Termination Risks Rising?
Co-employment is now common across the staffing industry. Agencies may recruit, pay, and manage benefits, while the client handles daily supervision.
That division often leads to confusion when things go wrong, especially when it’s unclear who made the call to terminate someone’s assignment.
For example, let’s say a temporary worker is let go after clashing with a client supervisor.
Even if the staffing firm had no role in the decision, it might still be included in a wrongful termination claim. Why? Because the legal system doesn’t always distinguish who “owns” the employment decision, especially when responsibilities are split.
Regulatory Challenges
The National Labor Relations Board’s 2023 joint employer rule expanded the definition of shared employment. Under the rule, joint employment can arise even when a company indirectly controls terms like scheduling, discipline, or supervision.
This standard increases the chance that both entities in a staffing relationship may be held liable.
The numbers also add to the picture. The number of employment discrimination lawsuits filed by the U.S. Equal Employment Opportunity Commission (EEOC) rose by 50% in fiscal year 2023. The EEOC also secured a record $665 million in monetary relief for workers that year.
For staffing firms managing hundreds of placements across client locations, the exposure is growing, and it’s expensive.
How EPLI Protects Against Wrongful Termination
General liability, professional liability, and workers’ compensation policies won’t step in when an employee sues for wrongful termination or workplace discrimination. That’s where EPLI comes in.
This coverage typically pays for:
- Legal defense costs
- Settlements and judgments related to:
- Wrongful termination
- Retaliation
- Harassment
- Discrimination
- Hostile or wrongful workplace environment
But for staffing firms, a generic EPLI policy often falls short. They need features that address their unique risk profile.
Here’s what that can include:
- Dual-entity coverage: Some policies can name both the staffing firm and client company as insureds, depending on the service agreement and underwriting approval.
- Expanded claim definitions: These definitions may include workplace torts or wrongful business environment claims involving non-employees.
- Worldwide protection: For U.S.-domiciled firms placing workers abroad, some EPLI policies extend global coverage.
- Joint defense provisions: When both the agency and client are named in a lawsuit, coordinated defense strategies help avoid conflicting responses and reduce legal costs (subject to contract terms and carrier approval).
These additions are critical. Staffing EPLI must match how these firms operate in real-world settings, not just how the policy is worded on paper.
What Should Agents Look for in EPLI Coverage?
To advise staffing clients effectively, brokers should focus on how EPLI responds in real-world scenarios.
Here are a few smart questions to guide the conversation:
- Does the policy address dual-employer or joint employment scenarios? These cases are common in staffing but may not be covered under standard EPLI.
- Who holds the duty to defend: carrier or insured? The answer affects whether the insurer manages the defense or the client must take the lead.
- Is the deductible aligned with the firm’s financial structure? Higher deductibles may seem cost-effective but can create cash-flow problems during litigation.
- Are there human resources tools or legal support resources? Some carriers offer compliance platforms, employee handbook templates, and legal consultations that help reduce claims.
More importantly, if a staffing firm relies only on general liability or professional liability, it may have no protection for wrongful termination, harassment, or discrimination claims. That’s a high-risk gap agents should address.
Helping Staffing Clients Navigate EPLI Risks
Wrongful termination claims carry more than just legal costs. They can hurt business relationships and tarnish reputations.
EPLI is a strategic layer of protection and a marker of how seriously an agency takes employment risk. When agents recommend policies built for these risks, they demonstrate that their expertise supports long-term operational resilience.
Partnering with an experienced wholesale provider like World Wide Specialty Programs gives brokers access to underwriting expertise and programs tailored for real-world exposures.
Let EPLI be the foundation of your staffing clients’ risk-management strategy. Contact us at World Wide today to deliver EPLI solutions that evolve with the staffing industry’s changing employment landscape.
FAQ About EPLI for Staffing Firms
What kind of insurance covers wrongful termination?
EPLI protects against wrongful termination, harassment, discrimination, and related claims. It’s a key component of insurance for employment agencies.
Can placed workers file wrongful termination claims?
Yes. Temporary or agency‑placed employees can sue both the staffing agency and the client company. Co‑employment exposure makes EPLI essential for shared defense and coordinated coverage.
Why are EPLI claim settlements so costly for staffing firms?
These claims often involve multiple parties, unclear employer relationships, and prolonged litigation. Combined legal fees and settlements can quickly escalate. Adequate EPLI limits and joint‑defense provisions are critical to containing these costs.
About World Wide Specialty Programs
For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and are committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.