Who Is Responsible For Workers Comp: Staffing Agency Or Client?
When a staffing agency sends an employee to work for another business, it can be difficult to know who is responsible for workers’ compensation. In a typical staffing arrangement, the staffing agency employs the worker and usually provides workers’ compensation coverage. The client controls the worker’s daily job and workplace. This means both businesses can have different responsibilities.
The staffing agency may handle the insurance policy, employee records and claim process, while the client may handle workplace safety, daily supervision, equipment and job-specific training. The exact responsibilities can change based on the employment arrangement, contract and laws that apply to the work. Knowing who handles each part before an employee starts can prevent confusion when an injury happens.
Is The Staffing Agency Or Client Responsible For Workers’ Compensation?
In most standard temporary staffing arrangements, the staffing agency generally provides workers’ compensation insurance for the employees it hires.
The client business is usually the company where the employee performs the work. It may supervise the employee every day and control the workplace, equipment and work process.
This creates two different areas of responsibility.
- Staffing agency: Usually handles the employment relationship and workers’ compensation coverage for its employees.
- Client: Usually controls the workplace, daily duties, site safety and job-specific work conditions.
The staffing agency and client should not assume that one company is responsible for everything. Their responsibilities should be clearly divided before the worker starts.
Why Does The Staffing Agency Usually Carry Workers’ Compensation Insurance?
A staffing agency normally hires workers and assigns them to other businesses.
The agency may handle:
Hiring
Payroll
Employment records
Workers’ compensation insurance
Employee administration
Worker assignments
The client then uses the worker at its own workplace.
The U.S. Department of Labor identifies staffing agencies as employers of record for temporary help services workers and states that staffing agencies are responsible for applicable workers’ compensation requirements.
This is why a temporary employee may work every day at a client’s facility while the staffing agency remains the company providing workers’ compensation coverage.
Does The Client Have Responsibility For The Worker?
Yes.
Having workers’ compensation coverage through the staffing agency does not mean the client can ignore workplace safety.
The client normally controls many things that directly affect the worker, including:
Work equipment
Work area
Daily instructions
Job duties
Work procedures
Site hazards
Emergency procedures
Day-to-day supervision
OSHA states that staffing agencies and host employers have responsibilities for temporary-worker safety.
The client therefore has an important role in preventing accidents even when the staffing agency provides the workers’ compensation insurance.
What Does The Staffing Agency Handle?
The staffing agency normally handles the employment side of the relationship.
Workers’ Compensation Coverage
The agency generally obtains workers’ compensation coverage for the employees it employs, subject to the requirements that apply to the particular employment arrangement.
The agency should keep its policy active and make sure the work being performed is properly understood.
Employee Information
The staffing agency may maintain information such as:
Employee details
Payroll records
Employment information
Assignment details
Workers’ compensation information
Assignment Information
Before sending a worker to a client, the agency should understand the actual job.
Important questions include:
What will the employee do?
Where will the employee work?
What equipment will be used?
What hazards exist?
What training is needed?
Who will supervise the employee?
A staffing agency should not rely only on a job title. The actual work matters.
Injury Reporting
The staffing agency should have a clear process for receiving reports of workplace injuries.
When an employee is injured at a client location, the agency normally needs information from the client so it can handle the workers’ compensation process.
What Does The Client Handle?
The client controls the workplace, so it normally has direct responsibility for many safety matters.
The client may need to:
Keep the workplace safe
Identify workplace hazards
Explain site-specific risks
Train workers on workplace procedures
Provide required protective equipment
Supervise daily work
Correct unsafe conditions
Explain emergency procedures
Report injuries to the staffing agency
OSHA recommends that staffing agencies and host employers divide safety responsibilities according to which employer is in the best position to prevent or correct a hazard.
For example, the client is normally in a better position to explain where emergency exits are located because the client controls the building.
Who Pays For Workers’ Compensation Insurance?
The company that purchases the workers’ compensation policy and the company that ultimately bears the cost are not always the same.
A staffing agency may purchase workers’ compensation insurance for its employees and include insurance costs within the rates charged to clients.
The U.S. Department of Labor has noted that staffing agencies may account for workers’ compensation costs through the markup charged to client businesses.
Therefore, a client may indirectly pay for part of the insurance cost through the staffing rate without purchasing the workers’ compensation policy itself.
The staffing agreement should explain how insurance costs are handled.
Who Reports A Workplace Injury?
The worker should report an injury according to the reporting procedure established for the assignment.
The client should also notify the staffing agency as soon as it becomes aware of an injury.
A useful reporting process should identify:
The person the worker tells
The staffing agency contact
The client contact
The insurance contact
The medical treatment process
Emergency procedures
Information that must be recorded
The exact reporting deadline depends on the applicable workers’ compensation system.
The important point is simple: do not wait to tell the staffing agency about an injury.
Quick communication allows the appropriate parties to respond and also gives the client an opportunity to address the condition that caused the accident.
Who Files The Workers’ Compensation Claim?
When the staffing agency employs the worker and provides the workers’ compensation policy, the agency will generally handle the claim with its insurance carrier.
The client still has an important role.
The client may need to provide information about:
What happened
Where it happened
When it happened
What the worker was doing
Equipment involved
Witnesses
Workplace conditions
Actions taken after the accident
The insurance company may need this information to review the claim.
The client should therefore cooperate with the staffing agency instead of assuming that the claim is entirely the agency’s responsibility.
Who Is Responsible For Workplace Safety?
Both businesses can have safety responsibilities, but their roles are different.
- The client generally has direct control over the worksite.
- The staffing agency has an employment relationship with the worker and should understand the conditions under which the worker is being placed.
- OSHA treats staffing agencies and host employers as joint employers for temporary-worker safety purposes.
- The practical question is not always “Which company is responsible?”
A better question is:
Which company controls the activity or condition that needs to be made safe?
For example, the client will normally know more about a machine being used at its facility. The staffing agency should still know that the worker is being assigned to that type of work and should communicate with the client about safety requirements.
Who Provides Safety Training?
Training responsibilities should be divided before the worker starts.
The staffing agency may provide general information related to the worker’s employment.
The client normally needs to explain hazards that are specific to its workplace.
For example, the client may need to explain:
How equipment works
Where hazardous areas are located
Emergency procedures
Required protective equipment
Workplace rules
Safe operating procedures
A worker cannot safely perform a job if the worker does not know the risks connected with that particular workplace.
OSHA recommends that staffing agencies and host employers communicate about training and make sure temporary workers receive the necessary information before performing the work.
Who Provides Personal Protective Equipment?
The answer depends on the job, applicable requirements and the agreement between the staffing agency and client.
The client may provide protective equipment because it knows the workplace and equipment involved.
The staffing agency may provide certain equipment under its agreement with the client.
The important thing is to decide this before work begins.
The businesses should identify:
What equipment is required
Who provides it
Who pays for it
Who checks it
Who trains the worker
What happens if equipment is missing
A worker should never arrive at a worksite without knowing what protection is required for the assigned job.
What Happens If A Temporary Worker Gets Injured?
The first priority is appropriate medical attention, especially when the injury is serious.
After that, the injury should be reported through the established process.
A typical situation may involve:
The worker reports the injury.
The client informs the staffing agency.
The staffing agency begins its workers’ compensation process.
The client provides information about the accident.
The workplace condition that caused the injury is reviewed.
Any unsafe condition is corrected.
The staffing agency, client and insurer communicate as needed.
The exact process can differ depending on the applicable law.
The important thing is that the staffing agency and client communicate quickly instead of passing responsibility from one company to the other.
What If The Client Caused The Unsafe Condition?
Workers’ compensation coverage and workplace safety are separate issues.
For example, suppose a temporary employee is injured because equipment at the client’s facility was not properly maintained.
The staffing agency may still be the company providing workers’ compensation coverage for its employee.
At the same time, the client may have workplace safety responsibilities because it controls the equipment and worksite.
Several questions may matter:
Who owned the equipment?
Who maintained it?
Who supervised the work?
Who knew about the problem?
Was the worker trained?
Was the equipment safe to use?
What did the staffing agreement say?
The answers depend on the facts and applicable law.
What If The Client Gives The Worker A Different Job?
A client should not change a worker’s duties without considering whether the staffing agency needs to know.
For example, a worker may be hired for basic warehouse work but later be asked to operate machinery.
That change can affect:
Training
Safety requirements
Protective equipment
Worker qualifications
Workplace risks
Insurance considerations
The staffing agency should be informed when there is a significant change to the assignment.
The original job description should not be treated as permanent if the actual work has changed.
Can The Staffing Contract Decide Who Is Responsible?
A staffing agreement can clearly divide responsibilities between the agency and client.
A good agreement can address:
Workers’ compensation insurance
Safety responsibilities
Training
Protective equipment
Injury reporting
Accident investigations
Recordkeeping
Job duties
Supervision
Changes to assignments
Insurance documentation
However, a private contract does not automatically remove legal duties that apply to a business.
OSHA recommends clearly defining responsibilities in agreements between staffing agencies and host employers, while also making clear that legal responsibilities cannot simply be transferred away by contract.
The agreement should therefore support legal requirements rather than be used as a substitute for them.
Who Handles OSHA Recordkeeping?
Workers’ compensation records and workplace safety records are different things.
OSHA says that when a host employer supervises a temporary worker on a day-to-day basis, the host employer generally has the OSHA recordkeeping responsibility for a recordable injury or illness involving that worker.
This is an important distinction.
The staffing agency may handle the workers’ compensation claim, while the client may have OSHA recordkeeping responsibilities.
That is why businesses should not assume that one company handles every record connected with a workplace injury.
What Should A Staffing Agency Check Before Sending A Worker?
Before accepting a new assignment, the staffing agency should obtain clear information about the work.
The agency should know:
The actual job duties
The worksite
Equipment used
Workplace hazards
Required training
Required qualifications
Protective equipment
Work schedule
Daily supervisor
Emergency contact
Injury reporting process
The agency should also ask the client to communicate significant changes to the assignment.
This is especially important when a worker moves from a low-risk job to work involving machinery, construction activities, chemicals, heights or other serious hazards.
What Should A Client Check Before Hiring A Staffing Agency?
The client should also perform basic checks before bringing temporary workers onto its site.
Ask the staffing agency:
Who employs the workers?
Who provides workers’ compensation coverage?
Can proof of coverage be provided?
How are injuries reported?
Who should be contacted after an accident?
What training does the agency provide?
What information does the agency need about the job?
How should changes to job duties be reported?
The client should then provide accurate information about the workplace and actual job.
Giving the staffing agency an incomplete description of the work can create problems later.
What Should Be Written In The Staffing Agreement?
A clear agreement can prevent many disagreements.
At minimum, the agreement should address the practical responsibilities of both businesses.
It should make clear:
Who employs the worker?
The employment relationship should be clear.
Who provides workers’ compensation insurance?
The responsible party should be identified.
Who supervises the worker?
The business controlling daily work should be identified.
Who provides safety training?
General and site-specific training should be separated where appropriate.
Who provides protective equipment?
The agreement should say who supplies required equipment.
Who reports injuries?
The reporting process should be simple and clear.
Who investigates accidents?
Both parties should know what information must be shared.
What happens when job duties change?
The agency should be informed about major changes before the worker begins substantially different work.
Common Mistakes Staffing Agencies And Clients Should Avoid
Assuming The Staffing Agency Handles Everything
The agency may provide workers’ compensation coverage, but the client still has workplace safety responsibilities.
Assuming The Client Handles Everything
The client may control the workplace, but that does not automatically mean it provides the staffing agency employee’s workers’ compensation insurance.
Delaying Injury Reporting
A delay can make it harder to collect accurate information about the accident.
Changing Job Duties Without Telling The Agency
New work can create new risks and may require additional training.
Leaving Safety Responsibilities Unclear
If the agency thinks the client is handling something and the client thinks the agency is handling it, an important safety step can be missed.
Failing To Tell Workers How To Report Injuries
Workers should know who to contact before an accident happens.
Assuming Workers’ Compensation Solves The Safety Problem
Insurance can provide benefits for covered workplace injuries, but it does not replace the need for a safe workplace.
Does The Responsibility Change In Different Countries?
Yes.
There is no single worldwide workers’ compensation rule.
The term, insurance system, employer definition, reporting process and legal responsibilities can vary from one country to another.
Even within one country, workers’ compensation rules can differ by jurisdiction.
The answer can depend on:
Where the worker performs the job
Where the employer operates
The employment relationship
The type of work
The staffing agreement
Local insurance requirements
Workplace safety laws
For this reason, a staffing agency working across different locations should not assume that one workers’ compensation process will apply to every assignment.
A Simple Example
Imagine a staffing agency hires a warehouse worker and sends that worker to a client.
The staffing agency employs the worker and provides workers’ compensation coverage.
The client provides the warehouse, equipment and daily supervision.
If the worker is injured while performing the assigned job:
The worker reports the injury.
The client provides immediate assistance when needed.
The client informs the staffing agency.
The staffing agency follows its workers’ compensation claim process.
The client provides information about the accident.
The unsafe condition is reviewed and corrected.
Both businesses communicate as needed.
This example shows why responsibility cannot always be reduced to one company.
The staffing agency may handle the insurance claim while the client handles the workplace problem that caused the injury.
How Can Staffing Agencies Reduce Workers’ Compensation Problems?
Staffing agencies can reduce confusion by doing a few basic things before an assignment begins.
First, understand the actual work.
Second, ask about workplace hazards.
Third, make sure the client knows how injuries must be reported.
Fourth, keep workers’ compensation coverage appropriate for the employees and work being performed.
Fifth, communicate with the client when job duties change.
Sixth, keep important responsibilities in writing.
The agency should also take worker safety complaints seriously rather than assuming the client will handle every concern.
How Can Clients Reduce Workers’ Compensation Problems?
Clients can also take practical steps.
Before a temporary worker arrives:
Explain the actual job.
Identify known hazards.
Provide site-specific training.
Make required equipment available.
Explain emergency procedures.
Identify the daily supervisor.
Explain how injuries are reported.
Tell the staffing agency when duties change.
A temporary worker should receive the safety information needed to perform the assigned work safely.
Redvo Insurance Solutions
Redvo Insurance Solutions has 15+ years of experience in insurance.
Staffing agencies and businesses that use temporary workers can discuss their workers’ compensation requirements with Redvo Insurance Solutions and explain how their employment and staffing arrangement works.
Because workers’ compensation needs depend on the business, employees and work being performed, it is important to review the actual situation rather than relying on a general assumption.
For questions about workers’ compensation insurance, contact Redvo Insurance Solutions at 1800-411-0733.
Conclusion
In a normal temporary staffing arrangement, the staffing agency generally provides workers’ compensation coverage for the employees it hires. The client, however, still has important responsibilities because it controls the workplace, daily work and many site-specific safety conditions.
The staffing agency and client should clearly decide who handles insurance, safety training, protective equipment, injury reporting, accident information and other responsibilities before the worker begins.
The most important point is that workers’ compensation insurance responsibility and workplace safety responsibility are not always the same thing. The staffing agency may handle the insurance claim while the client may be responsible for correcting a dangerous condition at its workplace.
The exact legal requirements depend on the employment arrangement and the rules that apply to the work. When responsibilities are clear from the beginning, both the staffing agency and client can respond faster and reduce confusion when an injury occurs.