Staffing agencies are unique simply because of the fact that their primary goal is to place their employees, most of whom are temporary workers, with other companies and organizations. Like any company that hires people for a job they will interview applicants, find out what their talents are and where there strengths lie, and discover what type of positions might best suit them in terms of employment opportunities.
Employment practices liability (EPL) insurance is coverage intended to cover most employment-related lawsuits that any company may face. The most common causes of a lawsuit are claims of wrongful termination, discrimination, and sexual harassment. Still, EPL covers a broad spectrum of other suits and claims, including:
- Failure to employ or promote
- Deprivation of a career opportunity
- Demotion or negligent evaluation
- Disciplinary action
- Employment-related misrepresentation
- Employment-related libel, slander, humiliation, defamation, or
- Invasion of privacy
An employee, or even a candidate being interviewed may make claim to any of the above if they believe they were not treated in a manner consistent with other employees, or fellow interviewees.
The importance of carrying EPL coverage
From the moment an employer begins the pre-hiring process until the exit interview, they are vulnerable to an employment-related lawsuit. While many suits are found to be groundless, the cost of defending against them can be expensive and time-consuming. Employment law is complex and varies depending on the jurisdiction in which it takes place.
The costs for litigation and damage awards will likely be high, and most predict that laws surrounding the employment industry will only become more complex. EPL insurance is needed to cover the cost of defense and any damages resulting from an alleged covered claim.
Because temporary staffing agencies face such a unique array of employment-related exposures resulting from the placement of their employees in positions with outside clients it’s important to confirm that any EPL policy in place for a temporary staffing agency includes temporary employees under the definition of employees covered by the policy.
As a temp staffing agency, any contract with a client may require that an employment practices liability policy be held by the staffing company to defend against, or cover damages resulting from an employment-related lawsuit made against them by a temp employee. This would mean that the policy would need to be specifically endorsed or extended.