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Staffing Agencies Have Greater Liability Risks

When you consider the working environment of a staffing agency, you can see that it encompasses many different offices because it has placed many temporary employees. This creates a much larger arena of risk for employment practices liability. You cannot directly observe the day-to-day operations of all the companies that use your employees or be sure of their corporate culture standards in daily office routines. Likewise, you don’t have the ability to directly supervise the people you hire. For these reasons, employment practices liability insurance is more important for staffing agencies than for most small companies.

Claims Are on the Rise

Liability lawsuits have been on the rise since the economic downturn of the late 2000s. Downsizing had a negative effect on interoffice relationships, with supervisors feeling more powerful and less accountable for their behavior toward subordinates, and rank and file employees unable to leave a job they did not like due to a weak job market. Temporary workers are more likely to feel they are not fully integrated into the office at which they are placed, and may experience more marginalization and stress.

Liability Insurance Coverage

The best way for staffing agencies to protect themselves from risk is to ensure that employees fully understand their legal rights; they should also know how to properly report and respond to incidents that may violate labor law. In addition, employment practices liability coverage is a must. According to recent federal government research, the average discrimination lawsuit costs more than $235,000, even if the plaintiff loses. To protect your staffing agency, consider a policy that covers common employment-related lawsuits and reasonable limits based on current statistics.