Temporary vs. leased employees: Know the difference — and the risks

Published May 03, 2017
Business Team.jpg
 

Executive Vice President

As a business owner, you know that hiring temporary or leased employees through an external agency can save you the hassle of finding, hiring and training new staff throughout the year. What many employers don't realize, however, is that hiring temporary staffing carries certain risks.

First, it's important to recognize the distincition between two classifications of employees: temporary and leased.

  • A temporary employee is someone who comes to your workplace from an employment agency and provides services for a specific project on a short-term basis.
  • A leased employee works at your location for a significant period of time, and there is no clear distinction between this person and your regular employees.

This distinction matters if one of your employees — leased or temporary — is injured on the job and sues you, the employer, for negligence in failing to train, supervise or provide a safe work environment.

The common expectation is that any injured person will be covered under the employment agency's workers' compensation policy. But this is where the distinction between temporary and leased employees comes into play.

If a temporary employee sues you, there is coverage under your Commercial General Liability (CGL) policy. If you were found to be negligent, the policy would pay on your behalf.

If the injured employee is a leased employee, however, there is no coverage provided for you under the policy. And if that's the case, you could be exposed to an uncovered claim and major financial loss.

Our advice

If your business utilizes a staffing agency that provides a workforce on a short- or long-term basis, carefully review the details of the arrangement. If an agency's employee is injured at your business and sues you, make sure you understand the difference between temporary and leased employees, and know the implications of each classification. Finally, we recommend that you require the staffing company to add the Alternate Employer Endorsement to its workers' compensation policy. This endorsement will resolve the issue of your company being left exposed.

If you have other questions regarding commercial liability insurance, contact a knowledgeable agent. The team at Sylvia Group would be happy to help.

CONTACT JOHN


About John Beauregard and Sylvia Group

John 2009 (cropped)-131750-edited.jpgDuring more than three decades as a business insurance professional in Massachusetts and Rhode Island, Sylvia Group Executive Vice President John Beauregard has built relationships with clients by recognizing and addressing their unique risks and needs, providing them with the best available coverage and delivering dedicated, dependable customer service, particularly in the medical manufacturing, municipal, education and transportation insurance markets. A Certified Insurance Counselor (CIC) and Licensed Insurance Adviser (LIA), John works with clients to help them secure what they've invested in and built, evaluating the risks they face, developing customized policies to protect against those risks and creating comprehensive risk-management programs designed to save them money by reducing premiums. 

Sylvia Group helps businesses and individuals protect their future by designing insurance, employee benefits and financial planning programs. We’re a locally owned agency known for our commitment to our clients and our community, as well for our industry expertise. Founded in New Bedford, MA, in 1950, headquartered in neighboring Dartmouth, and serving businesses and individuals throughout Massachusetts, Rhode Island and beyond, Sylvia Group is certified as a Woman Owned Business Enterprise with the Massachusetts Supplier Diversity Office and has the distinction of being the first six-time recipient of the Five Star designation awarded by the Massachusetts Association of Insurance Agents (MAIA) for all-around agency excellence.

Upcoming Events

SPONSORED EVENT:
Feast in the Wild
August 10
6-10 p.m.
Buttonwood Park Zoo

More Information »
SPONSORED EVENT:
Mattapoisett Police Officers Association Charity Golf Tournament
August 18
8:30 a.m. start
Allendale Country Club

More Information »
SPONSORED EVENT:
SCYPN Off the Clock: Networking and Beer Tasting
August 22
5:30-7:30 p.m.
Moby Dick Brewing Co.

More Information »
HOSTED EVENT:
Employee Benefits Compliance Seminar
Thursday, September 14
8:30 a.m. sign-in
8:45-10:30 a.m. presentation
Sylvia Group
500 Faunce Corner Road
Building 100, Suite 120
Dartmouth, MA

More Information »
SPONSORED EVENT:
New Bedford Seaport Chowder Festival
October 8
12:00-5:00 p.m.
City Pier 3

More Information »
HOSTED EVENT:
Medicare Open Enrollment Webinar
Thursday, October 12
11 a.m.-noon

More Information »
HOSTED EVENT:
Long-term Care Insurance Seminar
Thursday, November 16
5:30-7 p.m.
Sylvia Group
500 Faunce Corner Road
Building 100, Suite 120
Dartmouth, MA

More Information »

Sylvia Newsletter

Subscribe to our newsletter for news and updates about policies, enrollment changes and new laws that affect you.

Testimonials

  • “When I needed assistance with my business insurance program, Jill White immediately responded – and, even more important, she listened. She understood the challenges I had with my former agent, and she and the Sylvia Group team designed a program specific to my restaurant’s needs. I’m confident that with Jill’s expertise and personal attention, Fay’s is in good hands. That gives me the peace of mind to focus on what my family and I do best: serve delicious food and provide great customer service while running a successful business.”

    – Evelyn Bettencourt, Owner, Fay's Restaurant and Knotty Pine Fine New England Catering

  • “Thanks to John Beauregard and the professionals at Sylvia Group, our MassMEDIC membership has paid immediate dividends. Through the BIO Business Solutions® program, Primo Medical received a significant premium reduction on our Professional Liability policy. In addition, utilizing Chubb as our insurance provider and Sylvia Group as our broker, we’re confident that we have business partners who truly understand our insurance needs, provide outstanding loss control services and continue to work with us to lower our total cost of risk.”

    – Christopher LaPlante, Chief Financial Officer, Primo Medical Group

  • “I just wanted to take the time to recognize what a remarkable job Danielle Andre is doing. I cannot thank her enough for her time, her kindness and her willingness to make sure I’m comfortable with all the necessary changes that occurred from an insurance standpoint. As a whole, every Sylvia Group staff member has been friendly and knowledgeable, but Danielle has certainly gone above and beyond for me.”

    – Shannon S., Personal Insurance client

  • “I love your staff. In the first three or four weeks after we moved over to Sylvia Group for our insurance, I have had more communication and attention from them than I had in the seven or eight years we were with our former agency! You have a great team.”

    – Pat Cassan, Ocean Explorium

  • “I want to thank you for this incredible resource, ThinkHR. We will be accessing it frequently and appreciate Sylvia Group making this available to Advanced Eye Centers.”

    - Paul C. Abrantes, Executive Director, Advanced Eye Centers

  • “I so appreciate Julie Jennings' help with Medicare planning. It is a relief to be able to consult with a knowledgeable professional on insurance issues. I have no idea how people do this without such help.”

    – Chris Black, Personal Insurance client

  • “Working with Sylvia Group over recent years has taken our insurance issues from 'groans and moans' to 'no problem.' Rose Lopes, our Account Manager, is one of the most responsive people I have ever worked with. She responds immediately to questions or special requests. It is such a pleasure to work with Rose, who does whatever it takes to find a solution to our needs. We are very pleased… She always has our interests in mind.”

    – Lynne Foley, Director of Human Resources, Five Star Companies, Inc.

  • "Sylvia Group is by far the best insurance agency I have ever dealt with, both personally and in my business. They provide customer support that is not found in other agencies. For example, they take a personal interest in their clients, calls are always taken or returned immediately, and during reviews suggestions are made to offer the most cost effective and comprehensive coverage. When claims occur, they have always been there to facilitate the process. It has truly been a pleasure to have them represent me in my insurance needs."

    - William N. Whelan, Chairman, Whelan Associates LLC