Alternate employer endorsement
| Alternate employer endorsement |
|---|
| See also |
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.
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
