Because a staffing firm hires personnel for other companies, it faces unique challenges that typical HR executives don’t have to deal with. When a bad hire is made by in-house HR personnel, the company will generally chalk it up as a loss and move on. However, because a company pays thousands of dollars for a staffing firm to find the right employee, a bad hire could result in a professional liability lawsuit. Additionally, if a staffing agency misrepresents a company to a candidate, they can be sued by the candidate him- or herself for misrepresentation. Because risks are great in the industry, staffing firms need a sound temporary staffing insurance policy on their side.
Whether you specialize in direct hire, executive search and recruitment or retained search, a strong policy can protect you from claims brought about by both your clients and your candidates. Even if you do everything by the book—you prescreen, drug test, give skills assessment tests and interview the candidate multiple times—you may still face a claim. This may be through no fault of your own but simply because a client or candidate was dissatisfied. Whatever the case, a lawsuit can be costly and hurt your business. Temporary staffing insurance can help cover the costs and ensure that your business isn’t hurt by a legal blow.