Sat, 30 Sep 2023

The staffing industry is a rapidly growing field, and staffing agencies are at the forefront of this growth. Successful staffing agencies have a lot to offer to the economy. They help clients find great employees who are well-suited to their needs, and they provide great opportunities for employees who may not have had access to such jobs otherwise.

Unfortunately, as with any business, there is also the potential for legal trouble. Staffing agencies can be sued if they don't follow employment laws or if they break other laws while operating as a business.

For instance, the U.S. Equal Employment Opportunity Commission alleged in a lawsuit that Elwood Staffing Services, Inc., a global staffing agency with a facility in Orem, Utah, violated federal law by refusing to accept a qualified candidate because of her disability.

That's why professional liability insurance for staffing agencies is extremely important, which can cover legal fees and settlement costs if a worker or employer sues them for negligence or something else.

Avoid Financial and Legal Consequences of Unexpected Claims

Staffing agencies are not strangers to lawsuits. They are open to claims from clients as well as employees. If a staffing agency does not have professional liability insurance, it can be very difficult for them to deal with these legal claims.

Problems arise when an employee files a lawsuit against the staffing agency. The employee may claim that he or she was not paid enough money, did not receive adequate training, or even they were harassed by other workers at the agency.

The Equal Employment Opportunity Commission charged Aerotek, a staffing agency, for systemic discrimination in the hiring and placement of people assigned to work for Aerotek. Later, the commission settled the discrimination settlement with the staffing agency for the whopping amount of $3.525 million. According to the EEOC, Aerotek broke federal law by failing to recruit and by refusing to give assignments, placements, or jobs to people based on their race, sex, or age (over 40).

When this happens, it's important for the agency to have professional liability insurance in place so that they can protect themselves financially and legally. Moreover, the best way for staffing agencies to avoid the financial and legal consequences of unexpected claims is by getting professional liability insurance coverage.

Cover Employment Practices Liability and Other Key Risks Beyond Just Malpractice

Professional Liability Insurance is a policy that helps protect staffing agencies from the financial consequences of lawsuits, whether they are brought by employees or clients.

For instance, the two women filed a lawsuit in August this year against Superior Staffing and its client FAREVA Morton Grove, a manufacturer of cosmetics and personal care products, seeking class-action status, accusing them of wage fraud and several violations of the Illinois Day and Temporary Labor Services Act.

While lawsuits like this have been common in the modern workplace landscape, staffing agencies can still insure themselves by subscribing to professional liability insurance. The insurance can help these agencies navigate difficult times while also allowing them to keep their focus on the core business.

One of the most important parts of this coverage is coverage for employment practices liability which covers claims that an employee brings against an agency for discrimination or wrongful termination. This can be crucial in these situations because it can help ensure that you don't have to pay out-of-pocket for any settlements or judgments against your company.

Other types of coverage include:

  • Errors and omissions (E&O), which protects staffing agencies from claims related to their work with clients
  • Cyber liability, which protects against losses resulting from data breaches
  • Professional indemnity/errors & omissions insurance (PII), which protects against losses resulting from mistakes made during the course of business operations (including malpractice).

Help Cover the Cost of Legal Defense

In the case of a lawsuit brought against a staffing agency, there are many things that must be done quickly. First and foremost, you need to ensure that you have enough money to pay for your legal defense. This could be an impossible task if you don't have professional liability insurance.

With professional liability insurance, you can rest assured knowing that your agency will have access to funds to cover any legal costs associated with defending yourself against claims brought against your business.

Professional Liability Insurance also protects staffing agencies from being sued for negligence or malpractice - whether it's in their recruiting process or during employment training, or during the onboarding of new hires.


When it comes to professional liability insurance for staffing agencies, there are many benefits. It can protect you from lawsuits and help you stay in business. It can give you peace of mind when working with clients and help protect your staff.

It's important that all staffing agencies have this type of insurance if they want to stay in business. And with the right company providing it, it's not hard at all.

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