Worker injuries are a significant concern in the complex world of platform staffing agencies. These agencies employ gig workers who often switch between being independent contractors and W-2 employees, sometimes working for multiple agencies. This dual employment arrangement creates challenges when determining if workers’ compensation or occupational accident insurance applies, and which agency’s insurance should be used. In this blog, we will explore the complexities and uncertainties surrounding worker injuries and insurance coverage in the realm of platform staffing agencies.

Workers’ compensation provides important protection for W-2 employees, but independent contractors are typically not eligible for these benefits. This lack of coverage for workplace injuries poses a significant challenge for gig workers who are injured while working for platform staffing agencies.

To address this coverage gap, many agencies offer occupational accident insurance (OAI) for independent contractors. OAI is designed to provide financial protection in case of work-related injuries, similar to workers’ compensation. However, the effectiveness of OAI in fully compensating independent contractors for their injuries depends on various factors, including the specific benefits provided by the staffing agency.

When a worker is injured while working in both independent contractor and W-2 roles, it can be challenging to determine which insurance coverage should apply. Platform staffing agencies must have effective systems in place to navigate this dual employment scenario, clearly define responsibility, and streamline the claims process. Worker injuries can give rise to complex claim issues, requiring coordination between agencies and their insurance carriers in some cases, while leading to claim denials in others. These claim complexities can include:

Gig worker simultaneously working across multiple platforms – When a gig worker is simultaneously working for multiple platforms and gets injured while working for an agency, the workers’ compensation indemnity payments they receive are calculated based on their recent earnings from the agency where the injury occurred. However, this calculation also includes earnings from all other sources of income, including other agencies and direct employers. The agency that placed the worker is then responsible for paying a percentage of all the lost income from these various sources during the period when the worker is unable to work. This can significantly increase the cost for the agency’s insurance carrier, impacting the loss results of the host agency.

Gig worker simultaneously as a 1099 and a W2 – When a gig worker is injured while working on a 1099 shift, we often find that they attempt to file a workers’ compensation claim for their injuries. This could be because workers’ compensation benefits may be more financially advantageous for them compared to an occupational accident policy. Alternatively, the gig worker may not be aware that the agency also provides injured worker benefits through an occupational accident insurance policy. To establish that the individual was on a 1099 shift and not a W2 shift at the time of the injury, the agency must maintain detailed records. Swift action is then required for the workers’ compensation carrier to deny the claim, while the agency tries to redirect the injured person, and potentially their attorney, to the occupational accident policy for coverage.

Cumulative trauma (CT) injuries – CT injuries are not always linked to a single sudden and accidental event that caused the injury. As a result, WC and OAIC insurance carriers may need to coordinate coverage and payment for the injured gig worker over multiple policy years. It is crucial for the agency’s insurance broker to take charge of coordinating these multiple insurance carriers to ensure a positive outcome for the agency. Strong broker advocacy is essential in achieving this goal.

Return to work/modified duty considerations – When a gig worker is injured and becomes eligible for modified duty to facilitate their return to work, gig agencies often lack the necessary infrastructure to accommodate light duty assignments. Additionally, since much of the work in the gig economy involves part-time shift work, most customers are unable to accommodate modified duty arrangements. This situation can lead to increased costs for insurance claims if the worker is unable to return to work within the specified restrictions. To mitigate these costs, it is crucial to identify alternative sources of work for these individuals. Third-party organizations exist to assist in placing injured workers in meaningful jobs with charities and other entities. Leveraging these services to the fullest extent possible is essential in minimizing the financial impact of the claim.

Platform staffing agencies face the challenge of balancing the advantages of a flexible gig economy with the need for comprehensive employee coverage and navigating claim complexities. By addressing coverage nuances, utilizing strong contractual terms, and proactively managing dual employment challenges, agencies can create an efficient and supportive ecosystem. The ultimate goal is to achieve a balance where gig workers feel secure and protected, while the agency is properly protected from loss.

To learn more, contact a Marsh McLennan Agency (MMA) advisor today.

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