5 FAQs by Small and Start-Up Staffing Companies
The American Staffing Association noted that temporary and contract staffing sales totaled $109.2 billion in 2013, which was an increase of 4.3% over 2012. As the industry continues to see steady increases and growth, more and more start-ups and small temp agencies are entering the market.
Are you looking to jump on this trend and start a staffing agency, or do you currently work at a small, emerging business? Insurance can be a costly component that if not handled correctly can mean the difference between prosperity or shutting your doors. All of my staffing clients fall in the small or start-up range, so I’ve compiled a list of commonly asked insurance questions to help you through this area of your business.
Frequently Asked Questions by Start-Up and Small Staffing Agencies
1. Is it necessary to file my business entity with all states my employees are working in?
In most cases, yes it is necessary. Many states require companies to properly file their entities if employees will perform work there, and some will not issue a workers’ compensation policy under your business entity name until that is completed. You will need to check with your local state(s) to confirm.
2. What if I decide to make a placement outside of my niche or a type of placement I did not originally disclose to my insurance broker?
Before making the placement, you will need to have a conversation with your broker to confirm that the carrier is comfortable with the placement. It is possible, based on the position/exposures, the carrier may not wish to insure this type of placement.
3. What if my estimated workers’ compensation payrolls are different than the actual payrolls?
After your policy expires, your insurance carrier will conduct an audit to validate the payroll was paid out during that policy period. The carrier will then determine if a refund or additional premium is due. Many carriers offer pay-as-you-go workers’ compensation policies, which allow you to pay premiums in real-time based on actual payroll data.
4. Should I sign a contract with a potential client before reviewing the insurance requirements?
No, it is important to review the insurance requirements since the additional premium could affect your cost of doing business. In addition, you want to ensure the correct insurance limits are in place to avoid a breach of contract with your client.
5. How do I report 1099 (independent contractor) employee payroll to my insurance carrier for general liability, workers’ compensation, etc...?
As a business owner, you’ll be required to obtain a copy of your 1099 employee(s) certificate of insurance outlining the coverages in force (general liability, workers’ compensation, etc.) to ensure their payroll does not get reported under your business operations. Although 1099 employees are typically viewed as self-employed individual(s), if you’re not able to obtain a certificate of insurance, that employee(s) payroll will become your responsibility and the carrier will charge additional premium based on the payroll reported.
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