For those companies and manufacturers, who use temporary employment services to provide employees to conduct their usual and customary business, a serious situation can arise where the company can be left without Workers’ Compensation Coverage.
This can occur when the “temporary employment service” contract contains provisions that the temporary employee is actually employed by the temporary employment service, that it will be responsible for all benefits, Workers’ Compensation coverage etc. This is “all well and good” so long as there is a Workers’ Compensation policy in effect providing coverage to the “temporary employment service” for any injuries to the temporary employee provided to the company or manufacturer.
Many times, in order to cut costs, an endorsement will be added to the company/manufacturer’s own Workers’ Compensation policy excluding any coverage for any employees, temporary employees, coming from a named “temporary employment service”. This can drastically reduce the workers compensation policy’s premium.
However, in situations where the “temporary employment service” Workers’ Compensation carrier goes into liquidation and, particularly in areas where they were paying benefits for injuries sustained on the job by the temporary employee and cease to pay those benefits, the company or manufacture, by Missouri’s Workers’ Compensation statute, is a “statutory employer” making the company/manufacture personally liable for the Workers’ Compensation benefits to the injured “temporary employee”.
It is imperative that the insurance agent, for the company/manufacturer, be aware of the situation and make sure that there would be an excess or backup Workers’ Compensation policy in effect should for some reason, the “temporary employment service” Workers’ Compensation policy not respond.