Placing Perm vs. Temp Placements in the US

Placing Perm vs. Temp Placements in the US – What Insurance Do I Need?

Expanding your UK recruitment agency into the US is a fantastic opportunity to tap into the vast US job market. To prepare for the leap across the pond, you must take several steps to ensure the success of your agency’s expansion plans. One area of consideration is, “what insurance do I need”? The answer to this can vary significantly dependant on how you are operating in the US, and whether you are filling perm or temp placements.

For agencies operating in the US through their UK entity, it is crucial to understand your insurance requirements in the States. Here we offer an overview on the general insurance needs for both temp and perm placements.

Insurance Requirements for Permanent Placements

When placing candidates in permanent roles within US, your insurance needs are generally more straightforward. Key areas recruiters should consider and address for perm placements include:

1. Professional Liability Insurance (Errors and Omissions Insurance)

Professional Liability Insurance is essential for covering claims of negligence, errors, or omissions in the services you provide. Even when sourcing permanent placements, your agency could face legal action if a client claims that your candidate was unqualified or caused financial harm. This insurance helps protect your agency from potential lawsuits arising from placement errors.

2. General Liability Insurance

General Liability Insurance protects your agency against claims of bodily injury, property damage, or personal injury (such as defamation) that could occur over the course of your business operations. Though the risk is lower with permanent placements, it is still important that coverage is in place to protect your business.

3. Cyber Liability Insurance

Much sensitive and personal data is handled throughout the recruitment process, including candidate resumes and client information. As a result of the type of data shared, Cyber Liability Insurance is a crucial coverage to have in place. This policy protects your agency from the financial fallout of data breaches, cyberattacks, and other digital threats, which are particularly relevant when operating in the US with its strict data protection laws.

Insurance Requirements for Temporary Placements

retains greater responsibility for the workers placed in US roles. The insurance coverage UK recruiters require for temp placements include:

1. Workers’ Compensation Insurance

Workers’ Compensation Insurance is mandatory in almost every US state for employers with employees. Since temp workers are technically your employees, you must carry Workers’ Compensation Insurance in each state where you place them. This will cover medical expenses and lost wages for employees who are injured or become ill due to work.

2. Employment Practices Liability Insurance (EPLI)

EPLI is crucial when placing temp workers, as it covers claims related to employment practices such as wrongful termination, discrimination, harassment, and wage disputes. Given the complexities of US employment laws, particularly for temp workers, EPLI provides vital protection against costly legal claims.

3. General Liability Insurance

General Liability Insurance remains important for temp placements, as it protects your agency from third-party claims of bodily injury or property damage. For example, if a temp worker causes damage to a client’s property while on assignment, your agency could find itself being held liable.

4. Professional Liability Insurance

Professional Liability Insurance covers heightened risks with temp placements. If a temp worker performs poorly or harms the client’s business, the client could sue your agency for not providing a suitable candidate.

5. Vicarious Liability

Vicarious Liability refers to the legal responsibility your agency may hold for the actions of the temporary workers you place. Even though the worker is placed with a client, your agency can still be held liable for any negligent or harmful acts they commit while on assignment. This insurance helps cover claims arising from the misconduct or mistakes of temp workers, protecting your agency from potential lawsuits.

6. Cyber Liability Insurance

As with perm placements, Cyber Liability Insurance is important for protecting your agency from the risks associated with handling sensitive data.

Additional Considerations for UK Recruiters Operating in the US

While the insurance types above are essential, there are additional factors UK recruiters must consider when operating in the US:

State-Specific Requirements: Insurance regulations in the US vary by state, particularly for Workers’ Compensation and EPLI. Recruiters need to ensure that any coverage meets the specific requirements of each state where you place candidates.

Contractual Obligations: Clients may require you to carry certain types of insurance as part of your contractual agreement. Always review contracts carefully and ensure you meet these insurance requirements.

Cross-Border Coverage: It is important to verify that your UK-based insurance policies extend to cover operations in the US. This might require adding a global extension to your policy or purchasing US-specific insurance.

Safeguarding Your Recruitment Operations

Expanding into the US is a significant opportunity, but with the right insurance in place, you can focus on growing your business with confidence, knowing that you are well protected from any risk. Whether placing permanent or temporary candidates in the US, UK recruiters must navigate a complex landscape of insurance requirements to protect their business.

Expand Your Recruitment Operations with Confidence

Are you a UK recruiter considering you plans for US expansion? Expanding to the US is an exciting and substantial move for UK recruitment agencies. The US job market’s diversity, economic growth, and technological innovation offer an abundance of opportunities! Ensure your success today with the right legal expertise. 

Our advisers at WTT Legal are experts in all areas of law pertinent to temporary and permanent recruitment and outsourcing arrangements. WTT Legal’s Dual US-UK qualified Director of Legal Services, Carla Roberts, holds extensive experience in both the UK and US recruitment market. Our legal team are well placed to advise on transacting business in the US and using your UK entity to engage with US clients. Contact our specialised legal advisors today to navigate your US expansion confidently.

The information contained in this blog is provided for informational purposes only and should not be construed as legal advice on any matter. Individual circumstances will affect risk and legal advice should be tailored to your unique requirements.

Please note that WTT Legal Ltd. is not authorised to offer advice on insurance-related matters. For guidance on insurance or protection issues, individuals are advised to consult a professional insurance specialist.