Home » Workers’ Compensation: A Must-have for Temporary Staffing Agencies
January 26, 2024
Clearwater Partners

Workers’ Compensation: A Must-have for Temporary Staffing Agencies

Employers across all sectors must prioritize their workforces’ health, safety and well-being by understanding, acquiring and maintaining adequate workers’ compensation insurance. Still, while this type of coverage may be a widespread necessity, it may also be particularly prevalent for those involved in high-risk industries or who regularly conduct specific tasks, such as providing temporary staffing.

Understanding Workers’ Compensation Insuranceman lying on floor holding shoulder in pain

Workers’ compensation insurance is one of the most commonly purchased types of coverage among U.S. employers and plays a critical role in providing financial security for businesses and their employees. In response to work-related illnesses or injuries suffered on the job, these policies can help pay for the following expenses and losses:

  • Medical bills—If an employee’s injury or illness requires them to seek health care, workers’ compensation coverage can provide financial aid.
  • Lost wages—Workers’ compensation can compensate affected employees if their ability to work is impacted by work-related illness or injury.
  • Disability and death benefits—This coverage can help pay for ongoing benefits should an employee develop a disability or provide compensation to family members following a workplace fatality.
  • Vocational rehabilitation—Insurance may help provide affected employees with training for a new job if they are unable to return to their previous position.
  • Employer legal costs—If an employee’s injury or illness leads to a lawsuit, this coverage can help pay for a business’s legal expenses.

In addition to the aforementioned benefits, workers’ compensation coverage is legally required for most employers. Failing to adhere to these mandates could incur significant financial penalties, including fines, shutting down operations, and even jail time.

Why Do Temporary Staffing Agencies Need Workers’ Compensation Insurance?

As an employer, temporary staffing agencies may already be beholden to various workers’ compensation insurance laws; however, the need for coverage may go even further for businesses in this sector. This is because staffing agencies may often engage in “joint employer” relationships under specific employment laws by providing temporary employees to clients. Under these arrangements, both the staffing agency and the company to which a temporary employee has been assigned may bear some responsibility for their health and wellness.

Furthermore, staffing agencies should analyze all contracts with their client companies diligently. In some cases, these employers may require written agreements that the temporary staffing agency will take full responsibility for workers’ compensation claims filed by an assigned employee. Clients may also need staffing agencies to add an alternative employer agreement rider to their workers’ compensation insurance policies.

We’re Here to Help

At Clearwater Partners, we understand that workers’ compensation insurance is a staple of many businesses’ loss control measures, including temporary staffing agencies. Our agents will work with you to analyze your needs and procure appropriate coverage options. Contact us today to learn more.


This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.

Categories: Workers Compensation Insurance

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