Indemnity Provisions in Staffing Contracts

Indemnity issues in the context of staffing contracts can be summed up in three little words: 


DON’T DO IT!!!

Every one repeat after me – “DON’T DO IT!”  And again -- “DON’T DO IT!”  Excellent!!!  Now let me explain why.

    Most staffing clients will present a staffing company with the same written agreement that it provides to all of their other contractors.  In effect they are asking the staffing company to sign the same kind of contract that they would ask their roofing company or their tech company or their waste management company to sign. These contracts almost always contain a series of indemnity provisions that requires the contractor to indemnify the client for any liability related to the work being performed by the contractor.  This makes sense because it is the contractor who controls the work and the outcome.  But staffing clients tend to forget one little detail – staffing companies don’t control the work – the client does!

    What is the job of the staffing company?  To recruit and place qualified temporary employees that meet the high standards of training and experience expected by their clients.  But when a medical staffing company places an ICU nurse at a hospital, they certainly aren’t going to tell him when to administer medicines or how to run a Code Blue.  When a labor hall sends a crew out to a construction site, they’re not going to tell them where to dig the ditches to install the plumbing.  When a skilled labor company sends a welder out to a manufacturing plant, they aren’t going to tell him which boiler to patch.  This is the job of the client.

    Nevertheless, staffing clients still insist on having the staffing company assume responsibility for work over which it has no knowledge, control, or financial interest.  Staffing clients will commonly ask to be included as an additional insured on the staffing company’s commercial general liability policy.  They will also quite often ask to be included on the staffing company’s automobile liability policy for their own vehicles.  When your company is presented one of these contracts – DON’T DO IT!!!

    A staffing company should have its own master service contract specifically designed for the services it provides, namely, the recruitment and placement of qualified temporary employees.  The American Staffing Association has put out some general form contracts designed for the staffing industry.  These are a good starting point, but every staffing company is unique and every staffing client is unique and a contract that addresses the specific indemnity needs for each client is the best way to go.

    If your company has been faced with confusing or conflicting demands for indemnity from one of your clients I would like to hear about it so that I can address it in the future.  The following related issues will be addressed in up-coming blog posts:

How To Get The Client To Sign YOUR Contract”

and

"Is Your Insurance Broker Your Guardian Angel?  Why Not?"


    If you have any questions or comments about the contents of this article please feel free to contact me below.

 


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