Understanding The Legal Requirements Of Workers' Compensation For Temp Staffing In The Southeast

At its core, the idea behind workers’ compensation is simple—it is a type of insurance that offers benefits for medical care for employees who are injured or who may become ill, as a direct result of their job requirements.

How all that is defined in a legal sense, however, can vary by state, as each state is governed by its own rules and regulations.

Failing to comply with state workers’ compensation laws could result in fines and other penalties.

In Alabama, for example, all employers who have at least five (5) employees are required to have workers’ compensation coverage.

It is important to note that when a business leases a temporary worker through a temporary staffing agency, it is the agency that usually covers the worker under its own workers’ compensation policy, as the temporary agency is considered the official employer.

Benefits potentially covered under a standard workers’ compensation policy include but are not limited to:

• Injuries sustained while in the line and scope of employment.
• Job-related illness.
• Repetitive injuries, such as carpal tunnel, that are proven to be work-related.
• Missed wages or loss of earnings.
• Ongoing care for someone who may require physical therapy or related costs, even after they have returned to work.
• Funeral costs.
• Disability coverage.

Navigating Compliance

Most industry professionals agree that businesses such as temporary staffing agencies should lean on insurance companies, third-party administrators, and licensed agents to help not only evaluate their precise insurance needs but also select the right coverage to make sure all variables are considered.

This includes conducting a regular review of the temporary staffing agency’s policies to confirm they have the necessary coverage.

Any gaps in coverage that exist should be identified to mitigate risk. It is important to review your policy throughout the policy term.

It is imperative to know the reporting compliance for the state in which you are conducting business.

For example, Alabama requires employers to submit the first report of injury within 15 days from the date of injury.

The insurer then has 30 days to make the first compensation payment, if due.

States such as Georgia and Tennessee have mandatory penalties for medical and compensation payments not issued in compliance with state regulations.

In The End

The key takeaway is there is no “one size fits all” approach to ensuring an organization such as a temporary staffing agency is compliant in terms of workers’ compensation insurance.

Beyond simply having a workers’ compensation insurance policy, a business must also choose a partner who understands the laws in the state you are operating in.

Organizational leaders should be in a position where they can spend less time worrying about the administrative side of things so they can devote more of their attention to running a successful business.

Partnering with an organization that understands your industry will provide you reassurance that essential matters such as compliance are being taken care of.