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Who pays for the workers’ comp claim of a staffing agency employee?

On Behalf of | Jun 21, 2023 | Workers' Compensation |

Staffing agencies are a godsend for businesses that immediately need talent for a big project. Companies that want to save time during the hiring process could also tap a staffing agency to find the right applicant for a job.

But if an employee of a staffing agency gets a work-related injury or illness, who handles the employee’s workers’ compensation claims? Is it the staffing agency to which the employee belongs? Or is it the business borrowing the employee?

State law on coverage for loaned employees

A borrowing employer may purchase workers’ compensation benefits for a borrowed employee, but it’s not a requirement for business. According to Illinois law, if a loaned employee sustains a work-related injury while employed by a borrowing employer who isn’t responsible for the employee’s benefits, the employee must file a workers’ compensation claim with the staffing agency.

Likewise, the same applies to cases when the borrowed worker sustains an occupational disease while working for a borrowing employer. If no workers’ compensation benefits agreement exists between the borrowed employee and the borrowing employer, the staffing agency loaning the employee is responsible for covering their claim.

While the rules on who should cover a worker’s claim are clear, there can be some disputes between the staffing agency and the borrowing employer.

Resolving coverage responsibility disputes

The staffing agency and borrowing company can dispute their claims handling responsibility when a borrowed employee applies for a claim adjustment with the Illinois Workers’ Compensation Commission.

During that phase, the staffing agency and the borrowing employer may produce and submit a written admission (or denial) to the Commission saying they are (or are not) responsible for providing workers’ compensation coverage for the employee in question. The Commission will investigate the issue and determine which must cover the claim.

Suppose it’s found that one party is responsible for handling the employee’s claim and was trying to avoid its responsibilities. In that case, the Commission may award the employee an additional 50% of the amount payable furnished by the responsible party.

Because workers’ compensation claims involving staffing agencies can be tricky, it’s advised that employees retain the services of a lawyer. Lawyers can help advise the employee and ensure that the worker gets adequate compensation no matter who’s responsible for paying the claim.