Alternate employer endorsement

Alternate employer endorsement allows to extend insurance coverage to other companies for whom the employee works. Due to seasonal changes on the market, some companies do not need all employees for a full year. It is more convenient for company to engage employment agencies instead of keeping own recruitment team. That flexible strategy generates problems with insurance. Insurance companies then offered alternative employer endorsement as an adaptation to such flexible human resources management (Boggs C. 2011, pp. 190).

• The employee hired by the temporary employment agency is covered under the workers' compensation policy purchased by the agency.
• When the worker is hired out to another company, the firm that employed him will be looking for an alternate employer endorsement in order to prevent it from any judicial processes that the temporary employee may face (Kumar H. 2005, pp.150).
• The alternate endorsement covers injury suffered by workers during their temporary contract by the alternate company mentioned in the endorsement schedule. This schedule have to specify a state in which the temp employers are hired.
• The temporary employment agency leaves the worker's primary employer. The client is insured only when the temp worker is dedicated to it. If a project or contract is specified in the schedule, then coverage uses only to work carried out by the temporary employers at that project or under that contract.

Legal base

WC 00 03 01 Ag - the alternate employer endorsement is authored by the National Council on Compensation Insurance and issued in February 15, 1989 (Boggs C. 2011, pp. 190).

This endorsement ensure protection for all investigated: for the policy holder and the alternate employer; and to the employees of the alternate worker.

It mentions that the alternate worker can have an obligation to pay staffing employers’ compensation. The policy does not cover uninsured subcontractors or workers only because they are included on the payroll of your client. It would protect the company from an unforeseen claim that can be filed by a casual worker who was hired by an uninsured company of one of the clients.

Example

A telecommunication company expects that it would have a higher workload during the winter holidays, and ask an employment agency to hire a temp worker to help out. In order to protect itself from litigations that may occur from hiring a temp worker, the telecommunication company contacts the agency to insure it as the alternate employer in its employers' compensation policy. A few days into the work, the temporary worker has a physical trauma and requires immediate emergency treatment. The worker would be covered under the agency's workers compensation policy, and could not make a claim against the temporary company's liability policy (Boggs C. 2011, pp. 190).

The company which hires temporary workers still need to maintain its own workers compensation policy. With evidence in its possession of a properly written alternate employer endorsement from the agency it should be able to confidently turn to them to handle any injuries at work claims from the temporary employees they provide.

Advantages of Alternate employer endorsement

Alternate employer endorsement has many advantages. It allows to extend insurance coverage to other companies for whom the employee works, without the need of additional paperwork. Moreover, it helps to save costs and time, since it eliminates the need to set up different insurance plans for each employer. Furthermore, it allows to provide employees with more options, since they can choose among different insurance plans. Finally, employers can be sure that their employees will be insured while they are working in other companies. *It also provides employers with peace of mind, since they do not need to worry about changing insurance plans and their employees will be covered under the same policy regardless of the employer. *Moreover, it is easier to manage, since the insurance company keeps track of all the changes and updates the policy accordingly. *In addition, the employer can choose the level of coverage that is most suitable for the employee and their situation, ensuring that they are adequately protected.

Limitations of Alternate employer endorsement

Alternate employer endorsement has some limitations. These include:

• Unexpected costs for the employer: The employer may incur unexpected costs when an employee is injured and needs medical attention, as the expenses are not typically covered by the alternate employer endorsement.
• Limitations on the types of coverage: Alternate employer endorsement typically does not cover certain types of coverage, such as disability, workers compensation, and death benefits.
• Difficult to track the employee’s work: It can be difficult to track the employee’s work, since they are employed by multiple companies and may not be present at the same location all the time.
• Costs to the insurance provider: Insurance providers may have to pay more when they are providing alternate employer endorsements due to the extra paperwork and time involved in processing the claims.
• Risk of fraud: There is a risk of fraud when providing alternate employer endorsements, as employees could be employed by multiple companies without their knowledge.

Other approaches related to Alternate employer endorsement

One of the approaches related to alternate employer endorsement is to have an insurance policy that covers the employee regardless of the employer they are working for. This type of policy provides the employee with protection from potential losses or damages that may occur while working for different employers. Other approaches include:

• Insuring the employer-employee relationship even when the employee is working for a different employer. This allows for the insurance to cover the employee no matter who they are working for.
• Providing a policy that covers the employee when working for multiple employers. This policy may also provide coverage for any losses or damages that are incurred while working for any of the employers.
• Offering a policy that covers the employee when they are working for a single employer. This type of policy would cover any losses or damages that occur while the employee is working for that one employer.

In conclusion, alternate employer endorsement is an important insurance policy that allows companies to protect their employees even when they are working for different employers. It is important for companies to understand the different approaches to alternate employer endorsement in order to ensure that their employees are adequately covered.

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References

• Beam B. (red.) (2001), Employee Benefits, Dearborn Trade Publishing, pp. 213
• Boggs C. (2011)., The Insurance Professional's Practical Guide to Workers' Compensation, Wells Media Group, Inc., United States of America, pp. 190
• Kumar H. (2005), Guide to Employees' State Insurance Act, Rules and Regulations, Universal Law Publishing, pp. 150

Author: Sylwia Zych