Workers' Compensation Basics

Recent research found that many workers hired through staffing companies often have difficulty filing worker’s compensation claims. Industry advocates and commentators have suggested problems are caused by documentation deficiencies and a lack of regulations holding staffing firms responsible for their workers.

Often, the nature of temporary employment can make it difficult to discern who is responsible for providing worker’s compensation insurance for the temporary worker. Ultimately though, it is the responsibility of whichever company is the employer of the worker to make sure that their employee has the appropriate insurance. 


Additionally, in many cases the client company that uses the services of the worker provided by the staffing company may be directing the worker on a daily basis. In this scenario both the client and the staffing company could be deemed co-employers of the worker where both companies could be responsible for ensuring that the worker has proper workers' compensation coverage. 

Navigating Workers' Compensation Issues for Managers at Client Companies

If the client company that uses the workers services would like to directly employ the worker, as opposed to the worker being employed by the staffing company, then they may add temporary workers that they or the staffing company recruits to their existing insurance policy, In this case the client company may have a better insight to the level of risk involved with employing the worker and assign appropriate job classifications. 

However, if the client company does not want to be the statutory employer for the temp workers then they may be better off engaging workers through staffing companies. In this scenario the staffing company carries the workers' compensation insurance for the workers. It is important in this scenario to ensure that the staffing company is properly insured and classifying the workers. Because of co-employment liabilities an error on the staffing company could create risks for the client company as well. 


Another option to limit risk is to have a staffing company source the temporary worker and have an compliant, stable employer for the workers during their assignment. Emergent is an employer of temporary and project based labor recruited by staffing companies and client companies alike. The Emergent family of companies is one of the largest employers of temporary labor in the U.S. and has over 30 years experience. With Emergent client companies can utilize the best recruiting resources to locate temporary workers while leveraging Emergent's compliant contingent workforce employer solutions to lower risk and cost. 

In any case client companies should work with their staffing company or Emergent to ensure that they have the appropriate insurance and are correctly classifying the temporary workers. They should also endeavor to see that the the temporary and project workers are working in a safe environment. 

Navigating Workers' Compensation for Staffing Companies

When staffing companies employ temporary labor, they must take care that they take they assign the proper job classifications for their employees – which can be tricky if the staffing company does not have dedicated risk management and insurance resources or if they are not ensuring that their employees are performing the type of tasks outlined for the worker. 

Staffing companies may gain by being diligent in tracking the assignments, the type of work being done before it is performed and the risk history of their clients and their locations. In some cases it may be prudent for the staffing company to perform a site visit at the client site to verify that the workers will be in a safe environment. 

Purchasing workers compensation coverage can be challenging for temporary staffing companies as the cost of the coverage can be expensive For some higher-risk industries, insurance may be hard to obtain as well. Increasingly, many smaller staffing companies are finding it either harder to get coverage for their workers, or finding that the cost is expensive and challenging to their business model.  Also, handling risk assessment and work comp claims can be time consuming, and may require additional administrative support.  Working with Emergent, staffing companies are able to benefit from our economies of scale in obtaining workers comp insurance, assessing risk and handling claims.

For Staffing Companies and Client Companies

A big worker’s compensation risk for both staffing companies AND client companies is if the worker has been erroneously classified so that neither is the employer of the worker.  If the temporary worker has been mis-classified on a 1099 basis both the staffing company and/or the client company could be liable. 

How Emergent Can Help

Emergent’s family of companies is one of the nation’s largest employers of temporary workers. We employ the temporary workers you recruit – handling time-consuming and expensive employer’s obligation’s including worker’s compensation insurance and claims management.

We can help you lower the cost and risk of engaging the contingent worker’s you recruit. Contact us today at 855-250-5000.


DISCLAIMER - Emergent maintains its blog and other website content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector.  Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation.  Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way.  Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice. 

The Rise and Risks of the Contingent Workforce

Last week, Emergent was invited to host a webinar for HR.com and the Institute of Human Resources on "The Rise and Risks of the Contingent Workforce".

If you'd like to hear the webinar or receive a copy of the presentation, please click here where you will be taken to HR.com and prompted to create an account (it's quick, easy and takes just a minute) so that you can view our webinar on the HR.com site. Alternatively, you can e-mail info@emergent.com and one of our team members will send you a copy.


During the webinar, we asked the attendees to take part in a short poll and we found that co-employment, along with 1099 misclassification, were the top two concerns for companies hiring temporary workers. 

Co-employment is worrying for many companies that use contingent workers as the rules can be complex, change often, and can be challenging to sort out. Co-employment occurs when the company that utilizes the contingent worker’s services (the client company) manages the workers on a day-to-day basis, becoming a co-employer or joint employer along with the staffing supplier.

Co-employment could mean that the client company may be held liable for the decisions and mistakes of the staffing supplier and vice versa. Client companies and staffing suppliers must be clear about who is the employer of the worker and what responsibilities each company has towards the worker. These can vary from state to state, so companies must make sure that they are familiar with local as well as federal laws. Remember, it is both the staffing supplier AND the client company's responsibility to familiarize themselves with the law. Don't simply rely on the other party to tell you what you need to do - they might get it wrong...

Of course, it is relatively easy for a seasoned hiring manager or staffing supplier to become familiar with the laws around employing contingent workers, and they must also make sure that line managers throughout the organization of the client company know the rules and best practice surrounding the treatment of contingent workers, should they have any under their supervision. This can often prove challenging. 

We suggest that companies and staffing suppliers - after thoroughly researching best practice and obtaining legal advice - create a guide book that managers can refer to on how to properly engage contingent workers. Interestingly, when polled during our webinar, 64% of HR professionals said their companies did not issue any such guidance for hiring managers. 


Another concern for our webinar attendees was the misclassification of temporary staff as independent contractors. 46% of contingent workers classified as 1099 independent contractors are found by the IRS to be misclassified and one in three companies fail their worker classification audits.


Again, the rules are complex, so we suggest taking the 20 point IRS test to carry out an assessment of your contractors. If you don't meet the required criteria, your contractors may be more appropriately classified as W2 employees. If so, you should give us a call....


Emergent employs the contingent workers your company recruits or supplies. We are part of a family of companies that is one of the largest employers of contingent labor in the U.S. - trusted by many Fortune 500 companies to employ their contingent workforce.

Talk to us today to find out how we can help you manager your contingent workforce, maximize your profit and minimize your risk. Call us on 855 250 5000.

Co-employment and the contingent workforce: Do you know the risks?

Co-employment is a relationship between two or more employers whereby each has the legal responsibilities to the same employee.

Co-employment issues can present problems for the companies that supply contingent labor (temps, contractors, consultants, freelancers, and the like) and their clients. Often, client companies erroneously believe that the staffing company or other supplier they engaged the temp worker through is the sole employer of that worker. 


However, if the client company manages that contingent worker on a day to day basis, they could be regarded as a co-employer or special employer of the worker in conjunction with the worker's statutory employer - often a staffing company or 'payrolling' company. 


With co-employment, each company is liable for the decisions made by the other party. This means that if a contingent employee files a legal complaint and wins, both the supplier of the worker and the client company could be responsible for paying damages.


Co-employment risk is challenging to eliminate entirely, but there are many things you could take into consideration to reduce your risk considerably.


For the client company utilizing the contingent worker(s) services the following considerations may be observed:

• Do not discuss pay rates, increases or bonuses - this is the responsibility of the worker's statutory employer. A statutory employer is generally one who is liable for workers' compensation according to a statute establishing such an employment relationship. 
• Do not discuss opportunities for regular full-time employment without consulting the worker's employer. 
• Do not request that the worker complete timecards or forms with the client company's name on them. The worker's employer is responsible for all timecards and on-boarding paperwork (such as applications).
• Do not counsel assignment employees concerning: tardiness, punctuality, attendance, dress code, child-or elder-care arrangements or other personal matters.
• Do not inform an assignment employee that he or she is terminated or suspended. 
• Refer all questions relative to pay, benefits, duration of position or opportunity for employment to the worker's employer.
• Report any absences, tardiness or unacceptable behavior to the worker's employer.
• Inform the worker's employer about any changes in an employee's work schedule.

Emergent can help your company considerably reduce co-employment risks when working with contingent labor. 


Call us today on 855 250 5000 or e-mail info@emergent.com to find out how we can help you navigate the risks of hiring temporary labor!