When agents think about staffing company insurance, workplace injuries usually top the list. But there’s another growing threat that’s harder to see: employment-related claims tied to hostile or toxic work environments. These claims don’t always originate within the staffing firm’s own walls. In many cases, they originate at a client’s job site where the staffing firm has little day-to-day oversight.
It may surprise some firms to learn that they can still be held liable. Even without direct supervision of the employee, they may be named in a lawsuit because joint employer rules blur the lines between staffing firms and client employers. For this reason, staffing company insurance should extend beyond general liability and workers’ compensation. It must include employment practices liability insurance (EPLI) with wrongful business environment coverage.
Let’s explore how these claims happen, what makes staffing firms vulnerable, and how World Wide Specialty Programs’ (WWSP) EPLI can help fill the gap.
What Is a Hostile Work Environment?
A hostile work environment generally refers to workplace conditions involving harassment, discrimination, retaliation, or other inappropriate conduct. These issues don’t have to occur within the staffing firm’s office. They can also originate at client sites, where the staffing firm has limited control.
For instance, a temp might face repeated harassment from a supervisor at a client’s location. Even if the staffing firm was unaware, the employee could still name the staffing firm in a lawsuit. Why? Because they are often the employer of record and placed the worker in that environment.
Staffing agency insurance should include coverage for hostile work environment claims, especially those involving third parties or non-employees. Without this protection, staffing firms may be left with serious coverage gaps.
Joint Employer Standards Increase Risk
Federal joint employer standards have been in flux, adding uncertainty for businesses that share responsibility for workers. Ongoing rulemaking efforts and court challenges have kept the definition of “joint employment” unsettled, particularly in arrangements where more than one company influences working conditions.
This uncertainty is especially relevant in staffing relationships. Staffing firms often handle recruiting and payroll, while client companies direct daily tasks and supervision. When both parties have a hand in shaping schedules, job duties, or workplace oversight, questions can arise about shared responsibility if issues occur.
Additionally, a 2023 study found that 52% of U.S. workers say they’ve witnessed or experienced workplace misconduct in the past year, with common issues including favoritism and discrimination. This figure includes temporary and contract workers, highlighting how widespread the issue is even in non-traditional employment settings.
These dynamics make it essential for staffing firms and agents to review supervision agreements, reporting lines, and the definition of responsibilities in client contracts.
The Purpose of EPLI in Hostile Work Environments
Most general liability policies do not cover employment-related claims. If a staffing firm doesn’t carry EPLI, a harassment or discrimination allegation could leave them paying out of pocket.
As such, EPLI has become a must-have component of staffing company insurance. But not every policy offers the same protection.
Within WWSP’s EPLI policy, these exposures are addressed under what’s often called wrongful business environment coverage, which can encompass allegations such as harassment, discrimination, retaliation, and other employment-related misconduct.
Key features include:
- Coverage for hostile work environment allegations, including those involving non-employees
- A broadened claim definition and a duty to defend, starting with the first legal dollar
- Clients added as insureds, not just additional insureds, if contractually required
- Occurrence-based structure, not claims-made, so coverage applies based on when the incident happened
- Access to HR Cares, an online resource with employment law guidance and compliance tools
These features are especially useful in joint employer settings, where responsibility can shift quickly depending on who’s in control.
Agent Checklist for Hidden EPLI Gaps
Agents should ask the following questions during policy review or placement to protect clients:
- Are workers being placed in client environments with high turnover or a history of workplace issues?
- Does the staffing firm manage hiring while the client oversees daily supervision?
- Are clients requesting indemnification or full insured status in contracts?
- Are there long-term placements or embedded contractors at multiple sites?
- Have they reviewed their employment manuals, claim history, or service contracts in the past year?
Answering “yes” to any of these can signal elevated exposure. Agents should use these insights to structure policies that respond to the real risks.
Protecting Staffing Firms From Hidden EPLI Risk
Hostile work environment claims may not start inside the staffing firm itself. Rather, they may stem from the gray area of shared supervision at client sites. That’s exactly what makes them so dangerous — and so easy to overlook.
Staffing agency insurance must include EPLI with coverage for hostile work environment allegations, especially when workers operate in third-party workplaces. WWSP’s EPLI policy offers staffing firms and their clients a stronger defense against these modern liabilities.
When agents understand this exposure, they can help clients close coverage gaps and avoid surprises down the road. If you’re ready to help your staffing clients build a better safety net, reach out to World Wide Specialty Programs and explore the right EPLI coverage for today’s staffing risks.
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.