Perhaps the largest exposure your staffing agency faces is claims resulting from employment-related exposures, which in turn results from the placement of your employees in positions under the direction and control of your clients. It’s important to confirm that any temporary staffing insurance coverage includes an employment practices liability (EPL) policy for your agency, and one that includes temporary employees under the definition of employees covered by the policy.
Because it is such a complex relationship between your agency, the temporary employees, and your client companies, typically, both the temporary staffing agency and the client company are often sued jointly when an employment-related lawsuit is filed.
Most clients will insist your agency carry EPL insurance
As a temporary staffing agency, your contract with clients may require that your EPL policy defend or cover damages resulting from employment-related lawsuits made against them by your temporary employees. To cover your agency against this particular exposure, your EPL policy would need to be specifically endorsed or extended.
While many suits are groundless, with employees accusing managers, co-workers, or staff from either company of discrimination, harassment, or being denied a job or position that they felt they were qualified for, defending against these types of claims can be very costly and time-consuming as well.
Employment law is complex and varies depending on jurisdiction. Lawyers should be well versed in every aspect of EPL laws and be able to prove that a case does not have merit. But again, the costs for litigation can be extremely high and when a settlement is made in favor of the plaintiff, damage awards can be quite excessive, and most experts predict that employment law will only become more complex over time. EPL insurance is a very important component of temporary staffing insurance, because it covers both the cost of defense and the resultant damages from an alleged covered claim.