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.
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 the 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 the 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.
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 own 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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