Risk Management Fundamentals for Temporary Staffing Agencies- Philadelphia Insurance Companies

Risk Management Fundamentals for Temporary Staffing Agencies

Temporary staffing agencies have always faced a unique menagerie of risks and exposures. But as with almost every other industry, the past two years have fundamentally altered the landscape in which they operate, exposing new risks and compounding existing exposures.

"The pandemic accelerated existing trends in remote work, e-commerce, and automation," according to a report from the McKinsey Global Institute, "with up to 25 percent more workers than previously estimated potentially needing to switch occupations."

As organizational leaders attempt to navigate this turbulent terrain of virtual workplaces, pandemic response requirements, and changing employment rules, it's important they do not lose sight of two fundamentals-client risk assessments and a comprehensive employee hiring process. Recommitting to these two important risk management cornerstones will fortify their operational foundation against change and uncertainty.

Partner with the Right Clients

Partnering with the wrong client can be just as detrimental as hiring the wrong employee. The Occupational Safety and Health Administration (OSHA) makes it clear that "staffing agencies and host employers are jointly responsible for maintaining a safe work environment for temporary workers." This is why before taking on a new client, the staffing agency should conduct a thorough client risk assessment that includes:

Know the Industry and the Operational Hazards
Be knowledgeable of the client's industry and have an understanding of what kind of risks exist for their operations. Even OSHA acknowledges that staffing agencies "need not become experts on specific workplace hazards." But they should determine the conditions that exists and ensure they are sending employees to a safe workplace.

Detailed Job Descriptions
Obtain detailed job descriptions that include items such as physical requirements, hazards that may be encountered, and other client needs for the position(s) they are looking to fill.

On-Site Assessment
The on-site visit to a prospective client can help reveal much about the workplace environment. Use questionnaires and checklists, such as the COVID-19 Site Survey Checklist created by the American Staffing Association, to document the information.

Policies and Procedures
Request copies of and review their written policies and procedures, including employee handbooks, harassment and discrimination policies, and safe driver manuals.

Review OSHA Reports and Loss History
If a client has a checkered safety history or a number of past claims and losses, it may be best to pass on the partnership.

Hire the Right Employees

Making an ill-informed hiring decision can lead to dissatisfied clients, or worse, a multi-million dollar loss. The hiring process can help weed out potential issues and should be detailed, documented, and comprehensive.

Resume and Application Review
All aspects of the perspective employee's resume and application should be reviewed and verified, including contacting past employers, checking references, and verifying education and licenses.

Evaluations and Skill Testing
Documented computer, behavioral, personality, and other skill testing is vital in being certain the employee is prepared and able to perform the duties needed on the job. These assessments will also help better match the employee to a client.

Whether in-person or virtual, a good interview can help obtain additional information not discernable from a resume or online application, including how the applicant interacts and responds to questions on the spot. These are also vital in being able to match employees to the right employer.

Background Checks
Background checks should be conducted in accordance with state law and should be as comprehensive as possible, including:

  • Identity Verification
  • Social security number verification
  • Sex offender registry check, especially if the position involves working with children or other vulnerable populations
  • Professional license verification

The application should be referenced to insure any past addresses are considered when running a background check.

Motor Vehicle Reports (MVRs)
If a position requires the employee to operate a motor vehicle, an MVR should be obtained and reviewed against strict standards to determine if it is acceptable.

Coordination and Communication

Before any placement is made, the new client's contract should be finalized, clearly detailing the training and other employment responsibilities between the temp agency and the client. In most circumstances, the temp agency will be responsible in providing the more generalized training, such as topics required by OSHA including bloodborne pathogens and hazard communication. The client is typically responsible for providing hazard and worksite-specific training.

Finally, once a placement is made, communication between both the client and the employee should be continuous. Regularly communicate with the employee to check for any issues and address them immediately. Additionally, periodically verify with the client they are following safety requirements as outlined in their safety documents. Client feedback is also extremely important in evaluating an employee for future placements.

Risk Management Tools and Resources

Philadelphia Insurance Companies (PHLY) has the expertise to assist temp agencies with their risk management needs. In addition to PHLY's Risk Management Services (RMS) consultants who provide consultative support on a variety of hazards, PHLY has partnered with industry-leading organizations who provide tools and resources to our clients at reduced or no-cost. These include:

  • The PHLYGateway's Best Practices Help Line
    Philadelphia Insurance Companies has partnered with The McCalmon Group, Inc. to offer a Best Practices Help Line as part of The PHLYGateway. This help line provides policyholders with best practices consultations on employee relations, business risk, and other matters that could potentially result in a claim under your Management and Professional Liability, EPL, D&O insurance policies.
  • Intellicorp
    PHLY policyholders are eligible to take advantage of a specially discounted background check package along with special pricing on add-on products, including Motor Vehicle Reports (MVRs).
  • The PHLYGateway
    PHLY Management Liability Insurance customers with Directors and Officers (D&O) or Employment Practices Liability (EPL) coverage have access to The PHLYGateway. In addition to sample policies, they provide web-enabled employment practices services, including training and management tools for harassment and discrimination.
    PHLY provides a no-cost learning management system which clients can use to provide virtual training to employees.

IMPORTANT NOTICE - The information and suggestions presented by Philadelphia Indemnity Insurance Company in this E-Brochure is for your consideration in your loss prevention efforts. They are not intended to be complete or definitive in identifying all hazards associated with your business, preventing workplace accidents, or complying with any safety related, or other, laws or regulations. You are encouraged to alter them to fit the specific hazards of your business and to have your legal counsel review all of your plans and company policies.

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