Don’t be Left Liable If You’re a Business Owner

Whether you oversee a business of a handful of people or hundreds to thousands, having business insurance may be more important than ever, given today’s litigious society.

Another factor is with the usage of temp workers growing in some segments given the tough economy, employers need to be prepared for the potential liabilities that having such employees in the workplace brings.

According to numbers from the U.S. Bureau of Labor Statistics, following several months of drops in the number of temporary help services employees nationwide, the number has increased, reaching nearly 2 million (seasonally adjusted basis) in December of 2009. Bureau of Labor does not follow temp workers or independent contractors hired straight by employers, a much lesser number than temp workers brought on through temp agencies.

Not all employers understand when they bring on temporary employees via temp agencies that they could expose themselves to many, if not all, the same risks that occur when someone directly hires an employee.

Whether employees are hired through a staffing site or directly by the employer, employers should be knowledgeable when it comes to employment laws and benefits.

Employers need to clearly define the definition of temporary employment, as they otherwise run a true risk of being leveled with a claim that the employee is entitled to benefits under that plan. Potential benefits are a major lightning rod for possible liability.

Employers should keep in mind that using a temp agency to hire part-time workers mitigates a portion of the potential risk of an individual looking to be reclassified as an employee.

When you hire someone directly on a temporary basis, make it clear that they are part of a temp assignment and let them know what benefits apply as it relates to temp employees vs. full-time employees. In order to reduce potential liability, make clear that temp employees are not entitled to vacations, health care, 401(k), etc.

Finally, be sure as an employer to properly follow employment laws, and that your employees follow the guidelines too.

Employees under your guise need to follow discrimination policies and workplace harassment regulations in order to keep you from being opened up to liability. Also follow up with the temp agency supplying you with workers that they are conducting proper background checks of any employee set to walk through your door.

If you the employer are signing a contract with a temp agency, be sure to seek an indemnity agreement.

The indemnity agreement will keep the liability with the temp agency for any employment-related claims, along with indemnifying you as the employer for any losses that could occur should any claims be brought by a temp employee.

Tips to Reduce Liability to Temporary Employees:

A. Employers should make sure any staffing agency providing temporary workers has appropriate and adequate workers’ compensation employment practices and general liability insurance.

B. Employers should ensure all temporary employees receive the same safety-related training as regular employees for a specific position.

C. Employers should require staffing agencies to receive waivers of remedies against the client employer other than workers’ comp, and specify that workers’ comp benefits will be paid by the staffing agency. See Denlinger v. Kenwood Records Management, 2007 WL 4553050, 745 N.W.2d 95 (Iowa Ct. App. 2007) (unpublished).

D. Employees should receive an indemnity agreement from the temp agency