If you’re thinking about using a temporary staffing agency to help you with your day-to-day labor needs, there’s an advantage to consider that is often overlooked:
Staffing agencies can save you money not only by absorbing hiring costs but also by reducing workers’ compensation costs.
That’s because the temporary employee would, in most cases, be covered by the agency’s workers’ compensation insurance policy.
Of course, anyone can sue anyone at any time, so it’s a good idea to make sure your contract with the agency includes language requiring it to take sole responsibility for workers’ compensation claims if a temporary worker is injured on the job.
Workers’ compensation insurance pays for lost wages, medical bills and the cost of rehabilitation for a worker injured on the job. It also provides death benefits and funeral expenses for the dependents of someone killed in a work-related accident or disaster.
Employers in most states must provide workers’ compensation coverage for all their employees, whether full-time or part-time.
According to MIT, the costs of basic salary, employment taxes and benefits are typically in the 1.25 to 1.4 times base salary range. That means if you hire an employee at, say, $50,000 a year, you face additional costs of $16,500-$20,000.
But when you turn to a staffing agency, the cost of these benefits — which include workers’ comp premiums — never hit your bottom line.