Angela runs a staffing agency in Kent that places warehouse and light industrial workers with distribution centers in the Kent Valley. The agency has twelve internal staff and, on a typical week, around three hundred temporary employees on assignment at client sites.
A large distribution client's new contract required the agency to carry employment practices liability with third party coverage and a $2 million limit. Angela had EPLI at $1 million for her office.
What she asked for
A higher EPLI limit and whatever third-party coverage means.
What the review found
The policy covered twelve employees, not three hundred. Her employment practices liability policy was rated and written for the agency's internal staff. Temporary workers are the agency's employees too, and they are the ones most likely to bring a discrimination, harassment, or wrongful termination claim. The policy's definition of "employee" and its underwriting did not clearly account for them.
Third-party claims were excluded. A temporary worker who is harassed by the client's supervisor, or a client employee who says one of Angela's workers harassed them, involves a third party. Standard EPLI covers claims from your own employees; third-party coverage is an extension.
Wage and hour exposure was high and uninsured. Staffing agencies face claims over overtime, breaks, and pay calculations. The policy excluded wage and hour claims entirely.
Stop-gap and L&I classifications needed attention. The agency reported temporary workers under its own L&I account, as staffing employers do. Its stop-gap coverage had a low limit, and the client contract required more.
What we put in place
We placed EPLI with a carrier that specializes in staffing firms. The policy covers both internal and temporary employees, includes third-party discrimination and harassment coverage, and carries the $2 million limit the client required. We added a wage and hour defense sublimit, which pays to defend those claims even though settlements are generally excluded.
We raised stop-gap employers liability to meet the contract, and reviewed the agency's L&I risk classifications with Angela, since misclassified temporary workers are a common audit issue.
We added a staffing firm professional liability policy, covering claims that the agency placed an unqualified worker or failed to screen properly.
Why it mattered
The agency signed the contract. Several months later, a temporary worker alleged that a client's shift supervisor made repeated comments about her national origin, and that she was removed from the assignment after complaining. The claim named both the agency and the client. The new EPLI's third-party and temporary employee coverage responded, with defense counsel who handle staffing cases regularly.
If you run a staffing agency
- Confirm your EPLI covers temporary workers, not just internal staff
- Ask for third-party discrimination and harassment coverage
- Get wage and hour defense coverage; it is the most common claim
- Review L&I classifications for your temporary workforce every year
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