In a recent blog post, we discussed the issue of negligent hiring and how you can be held liable if you are a contract recruiter running your own back-office. The Fordyce Letter also recently tackled the subject of wrongful hiring at great length, concentrating on how a recruiter can be held liable even if they are not the employer.
The article states that a victim alleging negligent hiring could name the recruiter for “negligent consulting,” and some states even require the victim to bring the recruiter into the lawsuit as an “indispensable party.” The Fordyce Letter points out that 80% of resumes contain some false information and that simply using a misleading resume could expose you to liability.
To a large extent the article is correct. In a lawsuit, a victim can name anyone they think is liable. But often the burden is on the legal W-2 employer. If you are a contract recruiter running your own back-office, that’s you. So the best way to limit your liability is to outsource that responsibility to a back-office service provider who will then become the legal W-2 employer.
No matter who takes on the responsibility of employing your contract candidates, whether it be you or a back-office provider, it’s important that they carry a comprehensive package of liability insurance in case a lawsuit should arise. In fact, this is something many clients will want to see before they will use a contractor. If you decide to use FoxHire as your back-office service provider, you can tell your clients that we carry a comprehensive package of insurance that is required by many clients in today’s contract staffing industry. This package includes:
Commercial General Liability
$1,000,000 per occurrence
$3,000,000 in the aggregate
Professional Liability (inclusive of medical professionals)
$1,000,000 per occurrence
$3,000,000 in the aggregate
Commercial Excess Liability (Umbrella)
$5,000,000 combined single limits
Hired and Non-Owned Automobile Liability
$1,000,000 combined single limits
Employer Practices Liability Insurance (EPLI)
$1,000,000
Employee Dishonesty Bond
$1,000,000 combined single limits
Employee Forgery Bond
$25,000
This article is for informational purposes only and should not be considered legal advice.
