Workers' compensation for a leased or temporary worker

Coverage Q&A: Does workers' comp or a CGL policy cover an injured worker hired from a temporary staffing agency?

Does a CGL policy cover workers’ comp claims from a leased or temporary worker? (Credit: Rawpixel.com/Shutterstock)

Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. Analysis brought to you by our FC&S experts. 

Editor’s Note: Employers often utilize staffing agencies when going through periods of heavy workloads or for seasonal operations. Sometimes the line between whether the worker is a leased worker or a temporary worker can be blurred and difficult to determine, especially if the worker is injured when performing operations for the insured.  This week’s question deals with such a claim and asks whether workers’ compensation or the CGL should cover the worker.

Question: We have a manufacturing client that uses a temporary staffing agency for some of their employment needs. In this particular situation, the worker was provided by the staffing agency for a temporary-to-permanent position. The contract requires the staffing agency to have the Alternate Employer Endorsement and list our client as an Alternate Employer. This worker was injured and collected workers’ compensation from the staffing agency and then filed an action against our client.

The CGL carrier has denied the claim citing the workers’ comp/employer’s liability exclusion in the CGL and stating that the injured party is an employee as defined by “leased worker.” They advised that this injured party doesn’t fit the definition of a “temporary worker,” which is defined as a person who is furnished to you to substitute for a permanent “employee” on leave or to meet seasonal or short-term workload conditions. Since this injured party was furnished for a temporary-to-permanent position, they didn’t exactly fit into this definition.

Ultimately, the Alternate Employer endorsement should protect our client, but this coverage gap exists if that endorsement isn’t procured. Any suggestions on arguments for coverage under the CGL? This is a very common scenario for many employers.

— Pennsylvania Subscriber 

Answer: To learn the answer to this week’s coverage Q&A, please log into your FC&S Expert Coverage Interpretation account.

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