When a company chooses to hire an employee, that company is automatically taking on a certain level of risk. No employer chooses to have an incident of discrimination or harassment, but the reality of the possibility should not be overlooked. For this reason, employers are able to gain a level of protection through employment practices liability (EPL) insurance plans.
Many companies use staffing firms to assist in the recruitment and hiring of their employees. In the case of an incident involving an employee who was hired for a company by an agency, who is liable for any legal or civil issues that result? The answer is not always simple. Employers and staffing agencies should both review their agreements in detail concerning this topic. It’s possible that in the case of a lawsuit, the employee would be considered jointly employed by both the company and the staffing agency. If so, both the company and the firm would be responsible for defending their positions. It’s important for staffing agencies to have added protection, so the use of an employee practices liability plan is a solid investment for them.
In spite of best intentions, employee lawsuits happen. Staffing agencies must remain aware of the potential to be jointly responsible with their client in the case of an employee lawsuit, and should make sure they are protected accordingly.