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Temporary Employee Can Wind Up Being Your Employee


The Temporary Employee Files A Claim Against Your Company

A Temporary Employee can end up in the Ladder of Insurance(c). This is another excerpt from a Workers Comp manual I wrote 10 years ago.

Picture Of Businessman Touch Screen Temporary Employee File A Claim
(c) 123rf.com

Over the past twenty years, temporary employment agencies almost wrecked the WC insurance system. Unscrupulous owners would file for bankruptcy every year to avoid incurring substantial premium increases.

The premium increases resulted from a large number of claims and no type of loss prevention or claims handling procedures. Most states have a sub-section of the WC laws that apply just to temporary employment agencies.

When the temporary employment agencies would reopen under another name, the companies never had to incur the premium increases. The WC system relies on employers that have large numbers and/or high dollar claims to pay increased premiums to offset the lower premiums paid by the safer employers.

The State WC Boards will apply the ladder of insurance if the temporary employment agency has no coverage and one of their employees is injured. If your company uses temporary employees, there are ways to make sure that your company does not end up paying for their WC claims.

  • Ask the leasing agency to explain specifically how it can provide lower WC costs for the employees it provides.
  • Picture Temporary Employee Man and Woman

    Insist that the leasing agency specify what WC classifications it uses for the employees it provides. If these classifications are different from the ones used on your policies or different from what your research indicates is correct, examine these issues closely.

  • Ask the leasing company for a copy of its WC policy, not just a certificate of insurance. Obtain a complete copy of the policy, showing the classifications and the experience modifier used.
  • Evaluate the strength and the stability of the insurance company the leasing company is using. Be wary of an insurer with a Best’s rating of less than A-.
  • Have the agency provide a written statement that they will notify you immediately of a cancellation of their WC policy or any notice threatening cancellation.

The above list may be hard to obtain from your temporary employee providers. However, they should provide most of this info if they want your business.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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