Staffing Agency Liability: Placing Independent Contractors

This blog was originally published on February 12, 2015. It was updated and re-published on July 11, 2018.

Around 6.9 percent of United States workers were considered independent contractors in May 2017, with many working side by side with staffing agencies, according to data from the U.S. Bureau of Labor Statistics. But within the next decade, contract workers and freelancers could make up half of the American workforce, NPR has found. Independent contractors play a core part of the American economy, with many industries looking to these workers to fill gaps in their labor force. Surveys have found that many Americans are choosing to be independent contractors by choice.

Because staffing agencies are seeing an increase for these professionals, it’s good to find out more about what independent contractors are about and how their placement should be handled. Independent contractors cover everything from design and artistic consultation to engineering, construction and more. But with these types of workers comes rules. These workers have their own special and unique classification, rules and regulations that are often scrutinized and revised thanks to new policies. That’s why it’s so important to make sure that both staffing agencies and independent contractors are adequately covered while doing business.

Affordable Care Act Compliance

Affordable Care Act compliance plays a really crucial part in the coverage of independent contractors. In 2015, it was established that if your business has more than 50 full-time employees, then they are required to receive health coverage. Independent contractors are part of a loophole, meant to provide their own coverage for themselves. Long story short, independent contractors don’t count against that threshold.

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.

Intellectual Property

Another thing to handle when working with independent contractors is who owns the intellectual property. Generally any intellectual property belongs to the firm or individual, unless stated otherwise by contract. This can be very confusing when the contract doesn’t have very clear language. With 1 in 5 jobs in the US being held down by a contract worker, it’s more important than ever to make wording clear. Make sure you know who owns the property at the end of the day. As businesses continue to work with independent contractors, it’s imperative that your staffing business knows how to place them and knows how to reduce any liabilities in the process.

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 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 (800) 245-9653 to speak with one of our representatives.