Employment Practices Liability and the Staffing Industry

When it comes to employment practices liability (EPL) issues, temp agencies are generally no different than other industries. However, temporary staffing agencies still face some unique employment-related exposures resulting from the placement of their employees in positions under the direction and control of their clients.

It’s important for employees 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. After all, the relationship between temporary employees, the staffing agency and their client companies is often a complex one, and typically, both the temporary staffing agency and the client company are named in employment-related lawsuits jointly.

Employment Practices Liability insurance is a policy intended to cover most employment-related lawsuits that a company may face. The most common claims or accusations have to deal with wrongful termination, discrimination, and sexual harassment – though EPL covers a broad spectrum of other lawsuits, including:

  • Failure to employ or promote
  • Wrongful deprivation of a career opportunity
  • Wrongful demotion or negligent evaluation
  • Wrongful discipline
  • Employment-related misrepresentation, and
  • Employment-related libel, slander, humiliation, defamation or invasion of privacy

As a temporary staffing agency, your contract with clients may require that your EPL policy defend or cover damages resulting from employment-related lawsuits made against them by your temp employees. To cover this exposure, your EPL policy would need to be specifically endorsed or extended.

EPL has added value to policyholders

Understanding employment practices liability is important for everyone at your company. From the moment you begin the pre-hiring process, up until the time an exit interview is performed, you are vulnerable to an employment-related lawsuit. While many suits that are filed are without merit, defending against them is often costly and time-consuming.

Employment law is very complex and also varies depending on jurisdiction. As costs for litigation and damage awards continue to climb, many people predict that employment law will only become more complex as time goes by. EPL insurance covers both the cost of defense and the resultant damages from an alleged covered claim. This is valuable protection that no employer should be without.