Exposure Risks When Employing Contract Workers

As a business, you contend with the ebb and flow of the marketplace: stronger seasons, better economies and more demand for your product at different times of year. To meet this temporary growth, you may consider employing contract workers.

Plenty of industries and occupations utilize contract workers, from unskilled labor in a warehouse around the holidays to an extra set of accountants once tax season arrives. In fact, the most common type of non-employee present on a business’ premises is a contract worker. As long as these workers are performing duties similar to those of your full-time staff, they come with the same exposure risks.

Confusion About Responsibility
While the staffing agency may cut the paycheck, the worker is on your premises for several weeks at a time. As such, both you and the staffing agency are responsible for this group of contractors, including training and safety. However, several businesses try to evade this, passing management onto the staffing agency.
Because you have a stake in a contract worker’s performance and safety, it’s imperative that you:

  • Continue to comply with state and federal employment laws concerning workplace discrimination.
  • Consider benefits, especially if a contract lasts more than a few months.
  • Understand that your contract workers need to be briefed on your company policies and safety procedures. Since they’ll be on-site with your full-time staff, they should understand all policies, have adequate safety gear and know how to handle a complaint, should any issues arise.

Define All Terms of Employment
Plenty of temp workers have been given an assignment, only to have it unexpectedly terminated after a few months. Or, others may have taken on a brief assignment that turned into a multi-year ordeal, but the company did not provide benefits or secure hours.

As the years following the Great Recession saw temporary employment increase, more individuals now find themselves in this situation. Some companies looking to avoid paying out benefits began taking advantage of this, having temps come in for long-term, 40-hour per week assignments without offering anything in return. However, towns and states have started cracking down on this practice and, as a result, it’s recommended you give clear definition to a contract worker’s assignment:

  • What’s the projected duration of the assignment?
  • How different is the temp worker’s duties from those of a full-time employee?
  • Why temp workers are not eligible for benefits, including health insurance and 401(K) plans.
  • What is the employee qualified to do?
  • What type of training did you provide?

Without these factors considered, your business may be dealing with:

  • Workers’ compensation costs from the staffing agency. When a company requires a temp worker to go beyond his or her duties or does not provide adequate on-the-job training, injuries are more likely to occur. Rather than foot the entire claim, the staffing agency states to its insurance carrier that your company shares some responsibility and will loop you in for a large portion of the costs.
  • Employment disputes. A long-term temporary worker may claim that you owe them benefits, after they’ve done a lengthy assignment with full-time hours. At this point, you’ll be expected to prove why you didn’t hire the worker full-time.
  • Claims of worker abuses: Temp workers have taken businesses to court, alleging the host company required them to perform duties beyond the scope of the full-time staff. Specifically, these instances entailed working in dangerous conditions that jeopardized the temporary worker’s health and safety.

If you employ temporary workers, does your business have enough liability and workers’ compensation coverage? After you consider all factors listed above, work with Ion Insurance to  adjust your business policies to yearly or seasonal needs. To start, give us a call at 203.439.2815.