You should understand that your staffing agency might be held liable for any unfavorable actions of your employees while they are in the service of an employer. Your agency would be responsible for any legal issues that arise as a result of placing a temporary worker with a client’s company. While employee liability depends largely on what is stated in the contract between the two parties, in general, employment agencies have a duty to truthfully disclose information about employees to prospective employers.
Some legal issues that often arise between an employment agency and its employee clients include:
- Negligent Misrepresentation
- Breach of Contract
- Violation of a Statute
An example of negligent misrepresentation would be if an employment agency were to make a false representation about an employee. For example, the agency may be subject to a civil suit if they misstate information regarding wages or salaries. A breach of any contract provisions may be grounds for liability, and the violation of a state statute, which governs the operations of private employment agencies, is also a punishable offense. Such statutes often dictate the relations between the agency and its clients.
It should be noted that a client who uses the services of an employment agency is generally not considered to be an employee of the agency. Therefore an employment agency is not vicariously liable for the crimes or wrongful actions of the employee client, since an employee-employer relationship has not actually been formed.
This may be a bit confusing, which is why you should speak to a reputable staffing agency insurance agent who is familiar with staffing agencies and issues regarding employee liability concerns. Liability may be found under laws governing responsibilities in agency relationships, especially where the client has authorized the employment agency to act as their agent in securing employment.