Does your staffing company place temporary employees into professional positions/ capacity for your clients?
You must understand the difference between a temporary employee, consultant, and/or independent contractor. Your staffing company might unknowingly be acting as a subcontractor, consultant, engineering, architectural, IT/programming, healthcare, legal, financial, or another professional capacity not covered within the scope of your liability policy.
Some temporary staffing liability policies provide coverage for placing temporary employees in these positions but exclude coverage when these (your) employees operate outside of your client’s control or direction.
Sign-Off Authority
These employees should never have ‘Sign-Off-Authority’ or possess the authority to approve or be responsible for making decisions regarding the operations of your client’s company, its operations, or employees. In short, a temporary employee must ultimately work under the control and direction of your client. Otherwise, the temporary staffing company could be held liable for the professional decisions and actions of the temporary employee.
A Real-World Example
Some years ago, a national professional/white-collar temporary staffing company received a request to provide a Project Manager for their client, a large international aerospace company. The staffing company had a long-term and ongoing relationship with this client, providing professional engineers. However, the Project Manager position in question would oversee a project that entailed developing an APU (Auxiliary Power Unit) and would be expected to manage the program, employees and have ‘Sign-Off’ authority for the work performed on the project.
Just say No!
I advised my staffing company client not to provide this employee to their aerospace client because under these conditions the temporary staffing company would be acting as a professional engineering firm, would be assuming the responsibility for the actions and decisions made by their employee (the project manager), and finally because their staffing liability policy would not provide coverage for this exposure.
Months later, in the news, there was a report that the same aerospace company’s entire fleet of aircraft was grounded (worldwide) due to an issue with their auxiliary power units (APU). Had my staffing company client provided their employee as a Project Manager as described, they could have tangled in a lengthy and complicated legal battle with a duty to defend but without coverage to pay for doing so.
Blue Collar Professionals
One of the most frequent situations I encounter involves labor (blue-collar) temporary staffing companies. Sometimes these firms are asked to provide Project Managers/Executive Supervisors with the skilled trade or laborers they usually offer.
It’s Difficult Sometimes to say No to a Client
When the staffing company says no to placing the Project Managers/Executive Supervisors, they could jeopardize their relationship with their client. They could lose the job orders for the skilled trade and laborers. However, when they say yes, they assume legal responsibility for their employee’s decisions and actions concerning their client’s project. Typically a Project Manager/Executive Supervisor would be responsible for making decisions relating to the execution and completion of the project in question.
Protect Your Company
Your company should have a ‘Temporary Employee Sign-Off Authority Policy’ whenever you make temporary professional placements. This policy would document that your employee understands and acknowledges that they do not possess any authority, either verbal or written, to approve work or projects that they come in contact with during their assignment. A labor law attorney can help you develop this type of policy.
Direct Hires are ok
Liability boils down to whose employee is making the decisions. If you source and place a direct hire for your client, and your client hires the employee directly, that employee’s liability falls on the employer [your client].
Employ Best Practices
When you provide a direct-hire placement, your company is only responsible for acting professionally and concerning the agreed terms and conditions you worked. These responsibilities might include reference checks, aptitude or assessment testing, integrity testing, drug testing, criminal and sexual predator background checks, etc. Most staffing liability policies provide coverage for staffing companies providing direct hires.
It’s difficult sometimes to say no to a client
When the staffing company says no to placing the Project Managers/Executive Supervisors, they could jeopardize their relationship with their client and could possibly lose the job orders for the skilled trade and/or laborers. However, when they say yes, they are assuming the legal responsibility for the decisions and actions their employee makes in respects to their clients project. Typically a Project Manager/Executive Supervisor would be responsible for making decisions relating to the execution and completion of the project in question.
Protect Your Company
Your company should have a ‘Temporary Employee Sign-Off Authority Policy’ whenever you make temporary professional placements for your clients. Basically, this policy would document that your employee understands and acknowledges that they do not possess any authority, either verbal or written, to approve work or projects that they make come in contact with during the course of their assignment. A labor law attorney can help you develop this type of policy.
Direct Hires are Ok
Liability boils down to whose employee is making the decisions. If you source and place a direct hire for your client; and your client hires the employee directly – the liability for that employee falls on the employer [your client].
Employ Best Practices
When you provide a direct hire placement, your company is only responsible for acting professionally in doing so and in relation to the agreed terms and conditions in which you acted. Some of these responsibilities might include reference checks, aptitude or assessment testing, integrity testing, drug testing, criminal and sexual predator background checks, etc. Most staffing liability policies provide coverage for staffing companies providing direct hires.