Workers Compensation Alternate Employer Endorsement

Workers Compensation Alternate Employer Endorsement

Updated 2016-06-16

EMPLOYERS BE WISE! – IF YOU USE TEMP AGENCIES, REQUEST AN “ALTERNATE EMPLOYER ENDORSEMENT”

There may be times when your company uses temp agencies to add to work support in busy times or for specific company needs.  Generally, the temp agency or staffing company will provide for workers compensation insurance coverage for these folks. If a temporary employee working for you sustains an injury in your company, the injured worker can file a claim through the temp agency, but can also file a liability suit against your company stating it was the employer’s negligence that contributed to his injuries.  So if there is a chance for a double payout, it is likely most workers will take a shot at collecting as much as they can for their injuries

Many companies are protecting themselves against this risk by planning ahead and making sure the staffing company has added a specific “alternate employer endorsement”.  This endorsement grants primary coverage to employees of the named insured (the staffing or temp agency or company) while they are classified as temporary employees of another company and it recognizes the client company as the alternate employer.

Workers compensation should be the direct remedy in work injury situations. As long as this endorsement is added to the temp agency policy, you may be in a powerful position to avoid suit by a temp worker. The alternate employer endorsement should include both workers compensation and employers liability. If a suit should somehow move forward, this endorsement gives you the opportunity to look to the staffing company's policy.  They will be in a position to specifically submit their policy with the endorsement related to your specific guidelines which should limit your liability.

As the hiring company of temporary employees you should ask your temp staffing company for the following three requests:

  1. You want them to agree that they will provide workers compensation coverage for all temp employees they send to you.
  2. You also want them to have you specifically endorsed on their WC policy with the “alternate employer endorsement”.  
  3. Ask for a copy of that endorsement for your records. In addition, ask for a hold harmless clause in your agreement with the staffing company.

Of course, you will still need your own workers compensation policy for your business, but with evidence of a properly written “alternate employer endorsement” from your staffing company or temp agency,  you should be in a good position to confidently require the temp staffing company to process and pay work injury claims for the temp employees they supply.