Staffing agencies operate in an important but vague area of employment. They provide a link between employers and job seekers. In doing so, they often end up handling some tasks traditionally left to employers, though not all. Depending on the level of involvement with new hires, staffing fiduciary liability insurance may be needed to protect the agency from lawsuits.
What Is Fiduciary Liability Insurance?
Fiduciary liability insurance helps to cover administrators of employee benefits plans in the case of legal liability. There are several types of benefits plans involved:
- Pension/retirement plans
- Profit-sharing and 401(k) plans
- Health and welfare plans
- Employee benefit plans
The people and organizations that administer these plans can be faced with a lawsuit if they mismanage funds. For example, if retirement fund managers make risky or unethical investment decisions, they could be held responsible if employee retirement funds are compromised.
When Does a Business Need Staffing Fiduciary Liability Insurance?
Many staffing agencies deal in some measure with employee benefits, especially for temporary hires. They may take out social security and handle other aspects of benefits for employers. Making mistakes or not informing job seekers of all available benefits can lead to liability. In those cases, staffing fiduciary liability insurance helps.