Standard Market Workers’ Comp Programs for Staffing
Slim & None – Alternative programs are available and can work well!
by: KEN HEIDEGER, Nationwide Employer Services, LLC
There is a vast workers’ comp capacity and desirability gap in the eyes of workers comp insurance carriers towards the Staffing industry today that needs to be filled and fast. Standard market workers’ comp programs for Staffing are almost nonexistent at this time with many going to sources of last resort like state assigned risk pools.
Staffing entities number about 25k nationwide, of which many are limited by their infrastructures, paradigms, workers’ comp carrier reach, risk appetite, and by their owners lack of a macro vision as to what/where the real need and opportunity is today. Then there are millions of business entities, small, medium, and large, in need of more and more qualified temporary/long-term contract labor every day for a variety of reasons, including, the increasing excess costs of carrying full-time employees, and the negative effect of greatly increased regulations, including the confusing and monumental financial and operational impact of the ACA.
Experts predict that these issues will only get worse over the next several years. The ACA is forcing business owners to convert vast numbers of full-time employees to part-time and non-employee, contract workers (staffing labor), to avoid costly mandates of the act. temporary staffing entities are in the high risk category as far as WC insurance carriers are concerned and are therefore very distressed in their search for the required WC insurance coverage.
Most standard market WC carriers have left the temp staffing space altogether, frightened away by the concern about 3rd party risk and from a risk standpoint, the maybe overblown but perceived poor reputation that follows the Staffing model. This creates a huge opportunity for a qualified alternative outsource program that can work well and fill this gap with quality coverage, expert administrative services, and economic employee benefits, in many cases. This type of solution may be found in qualified alternative programs such as PEO (Professional Employer Organization) and CLS (Contract Labor Service or Staffing) models.
Under a PEO arrangement, a co-employer (primarily for benefits purposes) relationship is established between the risk and the PEO, with the PEO becoming the sole employer of record for IRS purposes. The PEO has a master “PEO” designated WC policy. The workforce is contracted back to the risk to operate and manage as usual.
Under a CLS arrangement, a sole-employer relationship between the risks employees and the CLS is established. The CLS has a master “Staffing” designated WC policy but typically performs no traditional staffing services. Little to no functional control is lost over the Staffing entitles business or labor force in either case, and in many cases, both the employer and employees receive more and less costly benefits, services, and workers’
The main purposes and goals of these relationships is to provide the risk with more suitable and economic WC and administrative functions on an outsource basis, including all management and navigation of the Affordable Care Act’s (Obamacare) regulations and implementation.
In both the PEO and CLS structures, all workers’ comp covered employee payroll must be processed by and flow thru the PEO/CLS, with payroll checks drawn on the PEO/CLS bank accts. Like any outsource relationship, you, the owner must do the adequate due diligence necessary on any provider to be satisfied and protect your business and reputation.
This article can also be found on the printed edition of Recruiting & Staffing Solutions Magazine. Also, this can be found on the following digital versions of the said magazine, see links below:
Pages 49-51: http://www.rssm.biz/rssm-digital-npa-edition.html
Pages 51-53: http://www.rssm.biz/rssm-digital-ussa-edition.html
Pages 51-53: http://www.rssm.biz/rssm-digital-csp-edition.html
Pages 51-53: http://www.rssm.biz/rssm-digital-alsa-edition.html
Pages 51-53: http://www.rssm.biz/rssm-digital-tempnet-edition.html