Implications of Staffing Sign-Off Authority
Architects and Engineers Professional Liability
If you’re a staffing company that places architects, engineers, IT professionals, project managers and other professional employees, it’s crucial to fully understand the job description and role those employees play within your clients’ operations. If not, you may be unintentionally opening yourself up to exposures not covered by your insurance policies.
Employees placed with your clients on temporary assignment should never have ‘sign-off authority’ or any type of authority to make decisions regarding the operations of your client’s company. Your employee must always be working at the control and direction of your client, and your client must be the one responsible for all levels of sign-off on a project. If they’re not, the staffing company could be held responsible for the professional decisions and actions of the temporary employee.
Understand Your Coverage
Your Professional Liability policy excludes the following services performed by temporary employees:
- Engineers and architects with sign-off authority
- Consultants with sign-off authority on final business decisions
When your employees sign off on projects or make final decisions regarding your client’s operation, your role switches from provider of temporary employees to provider of Architectural and Engineering (A&E) services, and your policy is not designed to insure those types of A&E exposures.
Architects and Engineers Professional Liability is available, although usually cost prohibitive for a staffing company that doesn’t engage solely in high volume placements of individuals requiring this type of coverage.
Protect Your Company
We recommend implementing “sign-off authority” policies and procedures in your office any time you make temporary professional placements for your clients. Within this policy, you want to document that your temporary employee understands and acknowledges they don’t possess any authority, either verbal or written, to approve work or projects they may come in contact with over the course of their assignment.
Further, we also recommend structuring your client contract so if you’re providing temporary employees of a professional nature, the job duties become part of the contract, and your client signs an acknowledgement that the employees you’re placing in their control don’t have sign-off authority in their business and neither you nor the employee will be held responsible for claims arising out of the breach of those duties inflicted by the client. Your attorney will be able to draft this type of contract language.
Don't Be Afraid to Ask
We understand the more information you ask for, the harder it can be to get a deal done. But don’t be afraid to ask for detailed job descriptions and follow-up questions to fully understand the duties required by your temporary employees. Asking the right questions and structuring your contracts correctly up-front will mitigate the potential for a large uninsured loss in the future.
Don't Be Afraid to Say 'No'
It can be a difficult conversation to have when you say ‘no’ to a client and could jeopardize your relationship. Understand your exposures and suggest a compromise. If a sign-off position cannot be avoided, in those situations a direct hire placement might make sense.
- 10 Standard Liability Concerns for Staffing Companies
- Top 5 Professional Liability Concerns for IT Staffing
- Liability E-Book
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