What are the common risks and liabilities of temporary placement services?

1 Co-employment issues

One of the main risks of temporary placement services is co-employment, which occurs when both the staffing agency and the client company share legal responsibility for the temporary worker. This can create confusion and conflict over who is liable for wages, benefits, taxes, insurance, safety, discrimination, and other employment-related matters. To avoid co-employment issues, you should have a clear and detailed contract with the staffing agency that defines the roles and obligations of each party, and follow the best practices for managing and supervising temporary workers.

2 Workers' compensation claims

Another risk of temporary placement services is workers' compensation claims, which can arise when a temporary worker gets injured or ill on the job. Depending on the state laws and the contract terms, either the staffing agency or the client company may be responsible for paying the medical expenses and lost wages of the injured worker. To reduce the risk of workers' compensation claims, you should ensure that the staffing agency has adequate workers' compensation insurance, and that you provide a safe and healthy work environment for the temporary workers. You should also report any accidents or injuries promptly and cooperate with the investigation and claim process.

3 Misclassification of workers

A third risk of temporary placement services is misclassification of workers, which occurs when a temporary worker is treated as an independent contractor instead of an employee. This can result in tax penalties, fines, lawsuits, and back payments for the staffing agency and the client company, as well as the loss of benefits and protections for the temporary worker. To avoid misclassification of workers, you should follow the IRS guidelines and tests for determining the worker's status, and ensure that the staffing agency complies with the applicable tax laws and regulations.

4 Data breaches and confidentiality

A fourth risk of temporary placement services is data breaches and confidentiality, which can occur when a temporary worker accesses, uses, or discloses sensitive or proprietary information without authorization or consent. This can cause serious harm to the client company's reputation, security, and competitiveness, as well as legal liabilities and damages. To prevent data breaches and confidentiality issues, you should limit the access and exposure of the temporary workers to the minimum necessary information, and require them to sign a non-disclosure agreement and follow the data protection policies and procedures.

5 Quality and performance

A fifth risk of temporary placement services is quality and performance, which can occur when a temporary worker does not meet the expectations or standards of the client company. This can affect the productivity, efficiency, and quality of the work output, as well as the customer satisfaction and retention. To ensure quality and performance, you should verify the qualifications, skills, and references of the temporary workers, and provide them with adequate training, feedback, and support.

6 Turnover and retention

A sixth risk of temporary placement services is turnover and retention, which can occur when a temporary worker leaves or quits before the end of the assignment. This can disrupt the workflow, continuity, and morale of the client company, as well as increase the costs and time of finding and hiring a replacement. To minimize turnover and retention problems, you should communicate clearly and frequently with the temporary workers, and offer them incentives, recognition, and opportunities for growth.