How Staffing Agencies Can Save on Workers’ Compensation Costs

Steps that staffing agencies can take to save on workers’ compensation coverage.

Because temporary staffing agencies have such a unique employment model, they require specialized attention when it comes to their workers’ compensation insurance.  However, with ongoing maintenance of employee information and careful work placements, it’s possible to maximize the coverage offered by workers’ compensation insurance for staffing agencies and keep it cost-effective.

  • Workers’ Compensation Concerns for Temporary Staffing Agencies

Temporary staffing agencies work by retaining a diverse pool of workers that they contract out to different companies when a temporary position opens up.  Usually, once the worker has fulfilled their contract with the company, they are available for the temporary staffing agency to place at a new position.

Usually, the temporary staffing agency is responsible for providing workers’ compensation benefits for the workers they contract out.  The main challenge that agencies face is that the number and types of employees working for them are constantly changing.  This can make it difficult for agencies to secure comprehensive workers’ compensation insurance coverage.

  • Updating Worker Information

Because the pool of employees is constantly in flux, temporary staffing agencies often deal with employee misclassifications and inaccurate payroll reporting.  Both of these issues can have costly effects on their workers’ compensation insurance.  Because agencies send off different workers to fulfil various roles, it can be difficult to track these employees and ensure that they are classified under the correct job code.  Additionally, as agency workers often leave to work steady jobs, the number of people employed by the staffing agency can change day-to-day.  To manage their workers’ compensation costs and needs, temporary staffing agencies must regularly update their employee classifications and payroll data.  They should also consider securing coverage via “pay-as-you-go” workers’ compensation programs.  These programs automatically adjust staffing agencies’ premiums based on monthly or quarterly payroll information.  Enrolling in this type of workers’ compensation program helps agencies scale their coverage and costs to fit their actual needs.

  • Worker Safety Checks

Temporary staffing agencies can also manage their workers’ compensation costs by minimizing their risk for employee injuries.  Because agencies send their workers to different companies and job sites, they cannot manage their employees’ working environments.  However, agencies can do their best to ensure that they only place workers in safe situations.  Before contracting a worker out, the agency should carefully vet the company seeking their services.  Staffing agencies should verify that the company offers comprehensive health and safety training programs, enforces strict safety protocols, and has an updated emergency plan in place.  Additionally, the agency should inspect the workplace for any obvious OSHA violations or on-site hazards.  The agency should only agree to place an employee with the company if they are sure that the work environment is safe for their workers.  Taking these safety measures is an important part of managing a temporary staffing agency’s workers’ compensation risk.

This is how temporary staffing agencies can manage their workers’ compensation coverage and cost.  Do you have additional questions regarding workers’ compensation insurance for staffing agencies?  Then contact the experts at PMC Insurance Group.  (877) PMC-COMP or

By PMC Insurance Group

Since 1996, PMC Insurance Group has worked to help independent agents grow their client base by offering workers' compensation solutions for a wide array of businesses. As one of the most distinguished workers' compensation wholesalers in the country, we have the tools and resources to help you create coverage programs for both small businesses and large accounts.