Expert Update: Risk Management Tools for Temp and Leased Employees

The economic challenges of the 21st century are forcing many employers to use alternative strategies with employment practices.  Using temporary or leased employees gives employers flexibility in staffing for changing demands; outsourcing the recruiting process to third parties also limits exposure to wrongful employment practices. Unfortunately, most employers utilizing this resource stop one step short of the proper risk management: they do not require the Alternate Employer Endorsement on the provider’s Workers’ Compensation Policy (which could be accomplished at the time of negotiating the staffing agreement or placement of the given temporary or leased employee(s)).

This endorsement is used to provide primary workers’ compensation coverage for employees of the insured who are injured while they are lent or leased by the insured to another firm. Suppose, for example, that an employee of a temporary employment service suffers an on-the-job injury during the course of a work assignment with a customer. In the absence of this endorsement, the “borrowed servant doctrine,” if applicable, might well make the customer for whom the temporary was working at the time of the injury responsible for payment of workers’ compensation benefits, instead of the temporary employment firm.

If you have further questions about the Alternate Employer Endorsement, or if you would like to discuss potential coverage options to further protect your business, contact me today.


Please note that the information contained in this posting is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This post should be reviewed by your legal counsel or tax consultant before use.