From remote work to shifting labor policy, staffing agencies must navigate an ever-changing web of regulations, rules, and potential threats. New laws governing temporary work, costly penalties rendered in discrimination suits, and rising data breach class action suits mean that risk management related to staffing requires constant vigilance.
Staffing agencies employ 2.5 million workers in the U.S. each week and are often under the microscope, so it's essential they approach both new hires and prospective clients with eyes wide open. Philadelphia Insurance Companies (PHLY) has long met the unique insurance requirements for staffing companies, and we've assembled some best practices for managing risk and compliance.
Mitigating Risk in Staffing Through Employee Vetting
Whether hiring a nurse, welder, or front-end developer, sending the wrong employee on an assignment can both jeopardize a client relationship and cause costly losses. A comprehensive vetting process is a crucial risk management strategy for temporary staffing, but it should also be safe and compliant. This process includes:
Rigorous and compliant background checks. New employees could be entrusted with a company vehicle, heavy machinery, or sensitive code. Verifying candidate details such as work history, education, professional licensures, legal status, and driving records are often routine for staffing agencies. Yet it's also important that screenings follow federal and state rules, such as those outlined in the Fair Credit Reporting Act (FCRA). PHLY partners with IntelliCorp for client discounts on legally compliant screening and background checks.
Evaluations of skills and temperament. Well-documented behavioral and personality assessments, as well as testing technical or computer skills, help ensure employees perform assignments with minimal risk. Such assessments also go far when matching temporary staff with the ideal client.
Data encryption and safety. Agencies collect vast amounts of sensitive employee data, and these details can be vulnerable to network breaches. Secure storage and data protection for staffing agencies are critical. Firewalls, VPNs, encryption, strong passwords, and protective software can help keep an agency's data secure. When these practices falter, PHLY's Cyber Security protection can cover legal fees, penalties, and coverage for damages to third parties.
Perform Risk Assessments for New Clients
Diligence in choosing the correct client is another cornerstone of risk management for temporary staffing. The Occupational Safety and Health Administration (OSHA) holds that both employers and staffing agencies share responsibility for compliance with workplace health and safety requirements for temporary workers.
A staffing agency's risk management checklist should include a comprehensive client assessment, such as:
Understand the Industry and the Operational Hazards. Staffing agencies must understand client industry risks to manage risk management related to staffing. While OSHA acknowledges they aren't safety experts, they have a responsibility to ensure safe placements. Comprehensive insurance programs are crucial, particularly EPLI for staffing agencies, to mitigate potential liability.
Workplace visits. Agencies should review a prospective client's worksite conditions and hazards to ensure adequate safety protocols are in place.
Review client policies and procedures. How thoroughly does the client train new staff members? Do they maintain comprehensive records of onboarding, hours, and terms of employment? The employee handbook can be a solid starting point for understanding a client's approach to risk management and insurance.
Awareness of a client's termination, discrimination, and harassment record. Employment agencies could be vulnerable to lawsuits and judgments against their clients, so it's worth knowing their records before doing business.
Stay Informed on Changing Employment Rules and Laws
To stay informed on changing employment rules and laws, staffing agencies must actively monitor federal, state, and local laws, mandates, and regulations. They should follow the U.S. Department of Labor's resources and subscribe to publications like Staffing Legal News to ensure compliance with hiring, background checks, wages, taxes, and workers' compensation.
Protect Agencies with Employment Practices Liability Insurance (EPLI)
PHLY has tailored insurance for temporary staffing agencies. Our Employment Practices Liability Insurance (EPLI) is designed to cover employers against claims alleging wrongful termination, discrimination, or harassment.
At PHLY, our EPLI for staffing agencies covers seasonal, temporary, and leased workers. It can be an essential tool for reducing the exposure of staffing agencies and clients to expensive claims and lawsuits.
PHLY also collaborates with industry-leading organizations to offer a suite of tools and resources at no cost or a reduced cost, such as:
SmarterNOW! - This learning management system provides PHLY policyholders with virtual employee training on topics such as abuse prevention, emergency response, and hazardous materials at no cost.
The PHLY Gateway's Best Practice Help Line (BPHL) - This resource provides PHLY policyholders with best-practices consultations on issues such as hiring and termination, employee relations, and other potential risks that could result in claims.
The PHLY Gateway - EPLI and Directors and Officers (D&O) policyholders have access to our powerful risk-management tool, the PHLY Gateway, and its extensive library of articles, forms, documents, and training.
Effective risk management related to staffing is essential for the success of any staffing agency. Our Risk Management Services team is always ready to help you strengthen your risk mitigation strategies. Contact us at PHLYRMS@phly.com to explore how our risk management expertise can benefit your staffing operations.