Indemnification Agreements for the Staffing Industry

1
Indemnification Agreements for the Staffing
Industry

• Recognizing potential pitfalls in service
  agreements

2
What is Indemnification?

• The making whole of another party after a loss
  incident.
• This responsibility can be created either by
  statute or by entering into a contract with the
  party.
• The general purpose is to transfer risk in
  this case from a client company to your temporary
  staffing firm.

3
Common Indemnity Language

• Hold Harmless Agreement
• Additional Insured (General Liability Policies)
• Alternate Employer Endorsement
• Waiver of Subrogation

4
Example of Indemnity Agreement

• Agreements to IndemnityRISKS ASSOCIATED WITH
  CONTRACTORS BUSINESS
• Contractors agree to indemnify and defend
  customer from any and all losses, liability,
  expenses (including court costs and
  attorneys fees), and claims for damage of
  any nature whatsoever, which customer may incur,
  suffer, become liable for, or which may be
  asserted or claimed against Customer, on the
  basis that Contractors have materially
  breached any of their responsibilities as
  set forth in the Customer Agreement.
• Contractors liability under this Agreement is
  expressly limited to those events which are
  insured under its various insurance programs
  and/or loss reimbursement and insured limits
  specified therein.

5
Example of Perils

• Property Damage
• Vehicle damage
• Loss of inventory
• Confidentiality Infringement
• Identity Theft
• Embezzlement
• Workers Comp
• Workplace Violence

6
Case Study

• Your company places 5 employees in a lab to do
  some research.
• One of the employees mistakenly leaves a gas
  valve on and inundates the building with
  explosive gas.
• No one is seriously hurt, but the building has to
  be evacuated by your client and two other tenants
  that operate businesses.
• What are some of the liabilities here?

7
Common Pitfalls for Sales Staff

• Your client demands that you sign or they will go
  elsewhere.
• You hear the line all of our other suppliers
  sign this with no objection.
• VMS arrangements distance you from the client and
  the ability to negotiate the provision.

8
Role Definition is Critical

• Stick to your specialty
• You know how to recruit
• You know how to provide employees and support
• You know how to match employees to assignments
• Let your client handle their specialty
• They know how to operate their facility and
  equipment

9
Placing Supervisors

• This can create some liabilities and increases
  your perceived control of the workplace.
• OSHA recordkeeping responsibilities can also be
  created.

10
Advice

• Avoid being pressured into signing
• Seek help from legal and insurance underwriting
  professionals
• Sample Contracts are available at
  http//www.americanstaffing.net/legalandgovernment
  /contracts.cfm

11
Summary

• Big Accounts can also mean Big Liability
• Watch for terms like
• Waiver of Subrogation
• Additional Insured
• Alternate Employer Endorsement
• Dont be afraid to negotiate and seek the help of
  insurance and legal professionals.
• Know the potential liabilities before agreeing to
  place supervisors or provide site-specific
  training.