SWG PL: 4 Types of Employment Agencies And How to Insure Them

Jul 2021

Recruiters are tasked with the challenge of vetting and recommending the right candidates for employers across a variety of industries. At the same time, they must also satisfy job-seekers looking for career opportunities that match their goals and experience. Whether their clients are hiring companies or individual job-seekers, recruiters must ensure they represent candidates accurately to avoid a costly lawsuit.

As Canada reopens its doors, thousands of companies will be on the lookout for top candidates, while employees revisit their career goals and reimagine work in a post-pandemic world.


Read on to learn about the four types of recruitment agencies, what insurance-related risks they face, and how SWG provides coverage to meet their unique needs.


4 Types of Employment Agencies


  1. Traditional Employment Agency

As well as helping job seekers find work, traditional employment agencies help employers find and hire employees. Many agencies specialize in a particular field, such as sales and marketing, accounting, human resources management, sports, or IT career searches. Some agencies charge job seekers for their services, although this is an increasingly rare practice.


  1. Contingency Employment Agency

A contingency agency receives payment when a candidate is hired by an employer. Companies of this type handle low- and mid-level searches, and they distribute many resumes to the employer.


  1. Retained/Executive Search Firm

Retained search firms have exclusive relationships with employers. Companies typically hire search firms to find candidates for executive-level and senior-level positions and for a certain amount of time. Many of these firms target executives who are not actively seeking new jobs, and they even reach out to executives who are not actively looking for new jobs to use their resources.


Known as “headhunters,” retained search firms are paid expenses and a percentage of the employee’s salary regardless of whether the candidate is hired. As one of their obligations to the company, retained agencies are thorough in reviewing the candidate’s qualifications before forwarding them to the hiring manager.


  1. Temporary (Temp) Agency

A temp agency is an employment agency that recruits employees for temporary jobs. Temporaries are often hired during seasons of increased business, tax season, harvest season, or to cover vacations or illnesses. Professional consultants are often placed through temp agencies on short-term assignments as well.


There are many temp agencies that fill “temp to perm” positions, which are jobs that start as temporary positions and can turn into permanent ones when the employer hires the candidate.


Job candidates may be placed on a retainer with temporary staffing agencies and assigned to jobs as they open up. Employees are thus officially employed by the staffing agency, which issues their paychecks.


They may offer medical coverage, childcare allowances, and vacation pay, among others. After a temp job becomes a permanent position, the staffing relationship ends, and the employer pays the employee directly.


Risks to a Recruitment Agency


Owners of recruitment agencies are at risk of falling prey to employees who claim to have more knowledge, experience, or education than they really possess. In addition to risking being wrongly accused by an employer, this also raises questions about their management style. There is always a possibility of errors happening, no matter how diligent or experienced a recruitment agency may be.


Besides bad hires and allegations of misguided professional advice, owners of employment agencies must juggle numerous tasks simultaneously as part of their day-to-day responsibilities. Occasionally, mistakes happen, and they could lead to a lawsuit. Fortunately, a variety of options exist for professional liability insurance, which can help better these professionals and their organizations.


SWG PL: Miscellaneous Professional Liability Insurance


SWG PL – Miscellaneous Professional Liability insurance offers a packaged E&O and CGL policy that covers a wide range of classes of business. Tailored E&O coverage protects small to large firms from a broad range of miscellaneous risks. SWG provides a Miscellaneous PL policy at competitive rates, bringing extensive knowledge and underwriting experience in professional liability.


We Cover:

Includes but is not limited to the list below. Contact us if you don’t see what you’re looking for.

● Accountants, Bookkeepers, and Tax Preparation

● Business Consultants

● Collection Agencies

● Travel Agents

● Employment Agencies

● Event Planners

● Interior Designers

● Leasing Agents

● Management Consultants

● Translators

● Utility Locators

● Paralegal Offices

● Occupational Health and Safety Consultants

● And many more


For more information, visit our product page at https://swgins.com/product/miscellaneous.html


Content is current as of the date of broadcast and is subject to change without notice.