Temporary staffing agencies serve a vital role in keeping businesses moving forward. According to the American Staffing Association, approximately three million temporary employees fill jobs every week. While important, these employees get placed in unfamiliar environments, making it more critical than ever for agencies to have Workers’ Comp coverage.
The Importance of Workers’ Comp for Staffing Agencies
Any employee, temporary or not, needs access to compensation if injured on the job. While coverage varies from state to state, temporary staffing agencies and workers comp should go hand in hand. Since these temporary employees work in varying industries at different companies, the need for coverage rises. Key placement areas that agencies fulfill include:
- Clerical
- Hospitality
- Medical staffing
- Engineering
- Manufacturing
- Accounting
- Light Industrial
- Warehousing
Considering that the U.S. Department of Labor counted 2.6 million nonfatal workplace injuries in 2021, the risks for injury can happen at any job. Workers’ Comp ensures employees have the safety net they need if a workplace injury happens. This coverage supports lost wages, medical expenses, and ongoing care.
While imperative for the employees, this coverage also benefits the agency. The staffing industry has many nuances that make reputation the key to success. If an incident happens and the client expects the agency to take care of things and they cannot, it may lead to more worries. The agency may find it more difficult to get skilled workers and face increased administrative burdens and liabilities.
The Need To Classify Temporary Employees for Workers’ Compensation Insurance
Similar to the complexity of the industry, the Workers’ Comp Policy has its own nuances. Before starting employment, each potential must be classified based on the National Council on Compensation Insurance’s Class Code Verification system.
Different jobs have different four-digit class codes that factor into the coverage and rates for the insurance. As an agency, markups get based on varying factors, such as taxes and pay rates, which apply to each position. These rates may vary by more than half. Using an incorrect class leads to headaches, such as claim denial, Workers’ Comp cancellation, premium adjustments, or non-renewals. Falsify any information may also lead to steep fines.
The Availability of Cost-effective Workers’ Comp Solutions
Staffing class codes are generally based on every $100 of payroll. That may equate to paying approximately $1 for every $100. The cost of the policy varies on the individual agencies’ needs and requirements. Factors that play into insurance rates include:
- Payroll
- EMR Rating
- Employee class ratings
- Coverage amount
- Claims history
- Work safety practices
Considering the influx of employees that come through a staffing agency’s doors, many opt for pay-as-you-go coverage. It allows for reliable flexibility as more temporary employees get in or leave. Agencies can expand or shrink coverage based on the current number of employees.
Workers’ Comp coverage provides peace of mind for the agency and its people. These policies only cover one of the many potential layers of liability a business faces. For complete protection, many staffing companies choose to have an umbrella of insurance that includes professional liability, general liability, and commercial property.
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 (877) 256-0468 to speak with one of our representatives.