Staffing Agencies Coverage Guide
Staffing firms must carry WC for placed workers in most states even though the host employer supervises them — and they face EPLI, wage-and-hour, and joint-employer liability that traditional WC doesn't address.
Critical Coverage
Workers' Compensation
Covers employee injuries and illnesses on the job
What it covers
Staffing firms must carry WC for placed workers in most states. Premiums are based on the work performed — placing welders is far costlier than placing receptionists.
Common misconception
Staffing firms think the host employer's WC covers placed workers. In most states, the staffing firm is the 'employer of record' and carries primary WC obligation.
What it does NOT cover
Owner exclusion. Drug/alcohol injuries. Intentional acts.
The gap — what happens without it
A placed welder loses an eye from a flash burn at a manufacturing client. Staffing firm's WC pays statutorily. Skipping WC means business shutdown by state labor commissioner.
What drives your premium
Payroll, class codes by placement type, state, experience mod, alternative-employer wording
Endorsements to ask about
Alternate employer endorsement (covers the host employer too — required by many client contracts). All-states. Higher EL.
Employment Practices Liability (EPLI)
Covers wrongful termination, discrimination, and harassment claims
What it covers
Wrongful termination/discrimination claims from placed workers AND from client companies who terminate the staffing firm's worker. Joint-employer liability is a major exposure.
Common misconception
Staffing firms think host employer's HR practices don't affect them. Joint-employer doctrine means both can be named in the same EEOC charge.
What it does NOT cover
Wage/hour class actions (often sub-limited). WARN Act. Criminal.
The gap — what happens without it
A placed worker alleges sexual harassment by the host employer's supervisor. Both the host and the staffing firm are named. Staffing EPLI defends and pays its share.
What drives your premium
Employees placed, industries, state, prior claims
Endorsements to ask about
Joint-employer/co-employment language. Wage/hour defense. Third-party coverage.
Important Coverage
General Liability
Covers third-party bodily injury and property damage claims
What it covers
Premises liability, advertising injury.
Common misconception
Staffing offices have client/candidate visitors constantly — premises exposure matters.
What it does NOT cover
Professional services. Employment.
The gap — what happens without it
A candidate trips in the lobby — $14K medical. GL pays.
What drives your premium
Offices, employees, revenue
Endorsements to ask about
Hired/non-owned auto.
Professional Liability (E&O)
Covers claims of negligence or mistakes in professional services
What it covers
Misplacement claims (placed worker steals from client, harms property), background-check failure claims, candidate misrepresentation.
Common misconception
Staffing firms think their referral disclaimers protect them. Plaintiffs' counsel routinely successfully argues negligent placement.
What it does NOT cover
BI/PD. Intentional acts of placed workers.
The gap — what happens without it
A placed accounting clerk — passed your background check despite a prior embezzlement — embezzles $80K from your client. Negligent-placement suit defense and settlement: $140K. E&O pays.
What drives your premium
Placement volume, sectors, screening procedures
Endorsements to ask about
Negligent placement. Background check liability. Worker dishonesty.
Cyber Liability
Covers data breaches, ransomware, and digital threats
What it covers
Breach response for candidate database (SSNs, DOB, employment history), client data exposure, ransomware.
Common misconception
Candidate databases hold extensive PII — full SSNs, prior employer info, addresses, often years of records. A breach affecting hundreds of candidates can cost millions.
What it does NOT cover
Unencrypted devices. Unpatched vulnerabilities.
The gap — what happens without it
Phishing attack exposes candidate database — 14,000 records. Notification, credit monitoring, regulatory: $360K. Cyber pays.
What drives your premium
Records, MFA, employees, claims
Endorsements to ask about
Funds-transfer fraud. PCI fines.
Not sure what you need?
Text us your trade and state — we'll tell you exactly what coverages apply to your business and shop the market for the best rate.