Can an employer be held liable if a temporary agency employee is hurt in the workplace? Is the temporary worker covered by workers' compensation?

Yes, client companies could have liability. Workers' compensation is one area in which both the temporary agency and the client company have a "joint employer" relationship under several employment laws. This means both the agency and the client company have responsibility to provide employee protections. When a company hires a temporary worker who is employed by a temporary agency, the temporary agency normally covers the temporary worker under its workers' compensation insurance. The worker is not the client company's employee, but it may still have liability for individuals working at the client's location under the client's direction. A client company can be sued by the injured party under the company's general liability policy.

Client companies should work with legal counsel for advice on how to limit their liability and also to ensure they have the appropriate liability insurance necessary to protect their organizations. Limiting liability may include reviewing and requiring certain language in their contracts with temporary agencies or requiring the temporary agencies to have additional riders on their workers' compensation policies. For example, many employers require temporary agency contracts to include language stating that the agency will take sole responsibility for workers' compensation claims if a temporary worker is injured while working for a client business. A more aggressive approach is to require the temporary agency to add an alternative employer agreement rider on its workers' compensation policy. This rider is more expensive for the temporary agency, but it will let the client company share protection under the temporary agency's workers' compensation policy. The temporary agency would have to agree to such an arrangement in its contract with the client company.

Client companies should not assume that temporary agencies are responsible for all temporary worker liability, and they should check their agency contracts and obtain legal advice on how to protect their companies.

For information on effective safety practices for temporary workers, see The National Institute for Occupational Safety and Health's publication, Protecting temporary workers: best practices for host employers.