What happens when a temporary worker believes they were eligible for health coverage but never enrolled? Or when a dependent loses benefits due to a simple clerical error? These common risks highlight the importance of employment agency insurance structured to address liabilities in benefits administration.
Under the Affordable Care Act (ACA), staffing agencies that qualify as applicable large employers (ALEs) are required to offer health insurance to full-time employees, including eligible temporary workers. As these responsibilities increase, even minor missteps in employee benefits management can lead to civil penalties or costly lawsuits. Employee benefits liability (EBL) coverage, when structured properly, plays a critical role in shielding staffing firms from the financial impact of such errors.
Why Staffing Firms Face Elevated Risk
Staffing firms often oversee benefits for both internal employees and a rotating pool of temporary staff across multiple client locations. This dual responsibility increases the chance of administrative errors, especially in tracking eligibility, managing enrollments, and keeping records up to date.
Tasks as routine as assisting with plan selections, terminating coverage, or advising employees on eligibility can turn into liabilities if not handled precisely. A missed enrollment deadline or vague communication may leave someone uninsured, exposing the firm to legal scrutiny.
In fact, according to Employee Benefit News, nearly 90% of employers experience mistakes during open enrollment. These errors contribute to billions in misplaced premiums and mismanagement each year, underscoring how easily problems can escalate.
What Employee Benefits Liability Covers
EBL insurance may be available as a standalone policy or as an optional endorsement to a broader commercial package. It protects staffing firms against claims resulting from administrative errors tied to employee benefit plans. Unlike fiduciary liability insurance, which addresses investment decisions and plan mismanagement, EBL focuses on clerical and administrative acts, including:
- Incorrect or delayed enrollment
- Termination of coverage without proper notice
- Inaccurate recordkeeping or eligibility determination
- Miscommunication during benefits counseling
This coverage typically applies to a variety of plans, including health, dental, vision, disability, and retirement. For staffing firms juggling large datasets and high employee turnover, this type of protection can prevent a simple mistake from turning into a costly legal or reputational problem.
Why Agents Should Prioritize EBL
EBL doesn’t always receive the attention it deserves during policy reviews. Yet the growing compliance responsibilities under the ACA and the intricate nature of managing benefits for both temporary and permanent employees make this coverage essential for staffing firms.
Many agencies are unaware that EBL is not automatically included in most employment agency insurance programs and must be added separately. This lack of awareness presents an opportunity for agents to proactively educate clients on the risks and the solutions available to them.
World Wide Specialty Programs delivers a standalone EBL policy designed for staffing agencies. Coverage is written on an occurrence basis and applies to acts, errors, or omissions committed within the United States and its territories, as well as in select international jurisdictions where claims are litigated under U.S. law. Limits and deductibles can be tailored to reflect each agency’s size, benefits structure, and operational scope.
Closing the Gaps in Employee Benefits Liability
The current compliance climate demands greater precision in employee benefits administration. Staffing firms must have safeguards in place to manage these responsibilities with care, and EBL coverage fills a crucial gap in their risk-management strategy.
With the right employment agency insurance partner, like World Wide Specialty Programs, insurance agents can help clients manage this exposure with confidence. From accidental omissions to recordkeeping errors, tailored EBL solutions help staffing firms protect their business and their employees.
Call us today to learn how World Wide Specialty Programs can help your clients secure employment agency insurance solutions that address legal and administrative risks tied to employee benefits.
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.