Considering Leasing Your Workers? It’s Complicated.
By Jeff DeHaan, CPCU
Increasingly, business owners are looking to staffing and Professional Employer Organizations (PEOs) to provide the workers for their companies. There are 131 PEOs in Oregon and there are at least 700 operating in the United States. Almost 2 million Americans go to work each day for a staffing firm.
Leasing your workers creates insurance contract issues that need attention. The first issue is distinguishing between a PEO and temporary employment. A temporary employee is replacing an absent worker or is hired to fill a professional or seasonal shortage for a limited period of time. Usually, workers compensation and other insurance issues are handled by the temporary agency.
If you lease workers through a PEO, however, much different insurance issues can arise. In the area of workers compensation insurance, the coverage can be provided by the PEO or by the client of the PEO. Often, the workers compensation insurance might be less expensive if purchased by the client. In addition, the calculation of experience modification factors and the following of claims can be simpler if the client company is insuring the workers compensation risk.
In addition, the client company should take steps to protect its self if it decides to lease employees and have the PEO handle the workers compensation insurance. The workers compensation insurance carried by the PEO needs to be properly endorsed so that the client company is protected. The client company should attempt to have the employee exclusion revised or removed from it’s own General Liability insurance just in case they are sued as a “third party” by a leased worker.
Oregon PEOs must be licensed by the Department of Consumer and Business Services (DCBS). HBA members considering worker leasing are encouraged to visit the DCBS web pages devoted to this topic at http://www.wcd.oregon.gov/. There is a lot of helpful information and a list of the licensed PEOs that are permitted to do business.
Montgomery & Graham is the endorsed agency for the HBA of Metropolitan Portland. We have a great deal of expertise in the area of proper risk management in employee leasing arrangements. There is also a discount offered by SAIF Corporation the dominant workers compensation insurance carrier in Oregon exclusively for members of the HBA. Currently that discount is 9 per cent in addition to all other credits and discounts that can be applied to a policy. Please contact Jeff DeHaan at jdehaan@mg-pc.com or by phone at 971-327-5793 if you have any questions
By Jeff DeHaan, CPCU
Increasingly, business owners are looking to staffing and Professional Employer Organizations (PEOs) to provide the workers for their companies. There are 131 PEOs in Oregon and there are at least 700 operating in the United States. Almost 2 million Americans go to work each day for a staffing firm.
Leasing your workers creates insurance contract issues that need attention. The first issue is distinguishing between a PEO and temporary employment. A temporary employee is replacing an absent worker or is hired to fill a professional or seasonal shortage for a limited period of time. Usually, workers compensation and other insurance issues are handled by the temporary agency.
If you lease workers through a PEO, however, much different insurance issues can arise. In the area of workers compensation insurance, the coverage can be provided by the PEO or by the client of the PEO. Often, the workers compensation insurance might be less expensive if purchased by the client. In addition, the calculation of experience modification factors and the following of claims can be simpler if the client company is insuring the workers compensation risk.
In addition, the client company should take steps to protect its self if it decides to lease employees and have the PEO handle the workers compensation insurance. The workers compensation insurance carried by the PEO needs to be properly endorsed so that the client company is protected. The client company should attempt to have the employee exclusion revised or removed from it’s own General Liability insurance just in case they are sued as a “third party” by a leased worker.
Oregon PEOs must be licensed by the Department of Consumer and Business Services (DCBS). HBA members considering worker leasing are encouraged to visit the DCBS web pages devoted to this topic at http://www.wcd.oregon.gov/. There is a lot of helpful information and a list of the licensed PEOs that are permitted to do business.
Montgomery & Graham is the endorsed agency for the HBA of Metropolitan Portland. We have a great deal of expertise in the area of proper risk management in employee leasing arrangements. There is also a discount offered by SAIF Corporation the dominant workers compensation insurance carrier in Oregon exclusively for members of the HBA. Currently that discount is 9 per cent in addition to all other credits and discounts that can be applied to a policy. Please contact Jeff DeHaan at jdehaan@mg-pc.com or by phone at 971-327-5793 if you have any questions
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