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By: Allison Hyatt
Summer is here and many businesses are looking to hire additional employees to cover the influx of business inspired by vacation season. One option is to use a temporary employment staffing agency to cover seasonal employee needs. Staffing agencies usually provide their own worker’s compensation and employment practices liability (EPL) insurance. However, what if an accident occurs and a seasonal employee hired through a staffing agency files a personal injury tort claim against both the business and the agency? Business owners may be surprised to find themselves in a situation where the exclusive remedy of their state’s workers compensation statute may not apply to the claim against the business. The surprise may turn to shock when the claim is further denied by the business’ commercial general liability (CGL) insurer, citing the common exclusion for bodily injury to an employee.
How can businesses avoid this coverage gap? It is important to examine the definition of an “employee” in the CGL policy’s employee exclusion, which may include “leased employees” and “temporary employees.” Depending on your jurisdiction, both leased employees and temporary employees can be deemed employees of just the outside staffing agency or both the staffing agency and the business. In the dual employment situation, which is usually a factual determination, the business would be covered by its own worker’s compensation insurance. Businesses can increase their coverage by requesting an endorsement to their CGL policy eliminating temporary and leased workers from the employment exclusion, just in case they find themselves in the situation described above.
For more information, please contact Allison Hyatt at [email protected].