An industrial staffing agency verifies every supplier's workers compensation before the next placement

At a glance

Its client master service agreements require every company in that chain to carry workers compensation with an alternate employer endorsement, a waiver of subrogation in the client's favor, general liability naming the client as additional insured, and auto liability for worker transport. Pikorua Security now verifies all of it and blocks placements through any supplier that falls short, inside Bullhorn, where recruiters already work.

The challenge

Staffing contracts push risk down the chain. A client's MSA typically makes the agency answerable for its own workers and for any supplier it brings onto the floor, and the client's risk team audits that promise. In this agency's case, about 40 client audits a year asked for proof that every supplier on site was insured to the MSA standard. The agency answered each one by hand, branch by branch, over email.

The certificates themselves were the hard part. A staffing supplier's workers compensation policy does little for the client unless it carries WC 00 03 01, the alternate employer endorsement, scheduling that client, and most MSAs also require WC 00 03 13 to waive the carrier's right of recovery against the client. Neither appears on an ACORD 25 as anything more than a description or a checkbox. Two of the agency's states, Ohio and Washington, are monopolistic: workers compensation comes from the state fund, proof is a state-issued certificate rather than an ACORD form, and employers liability has to be bought separately as stop-gap coverage.

Branch managers were also approving suppliers on deadline. A supplier with an expired policy could be added to an order on a Friday afternoon because the order had to start Monday. During one quarterly review, the agency's Director of Risk and Compliance found 23 suppliers working active orders with a lapsed or missing workers compensation certificate.

What changed

Pikorua Security built a supplier rule set from the agency's template MSA and its eight largest client MSAs, which carry stricter terms. The rules check statutory workers compensation with employers liability of at least $1,000,000 each accident, WC 00 03 01 scheduling the client where the MSA requires it, WC 00 03 13 waivers, general liability at $1,000,000 each occurrence and $2,000,000 aggregate with CG 20 26 or blanket additional insured wording, and CA 04 44 on auto policies for transport vendors.

For suppliers in Ohio and Washington, Pikorua Security reads the state fund certificate of coverage alongside the ACORD 25 that shows stop-gap employers liability, and treats the pair as a single workers compensation record. AM Best checks run on every private carrier, and state fund coverage is labeled as such rather than failed for lacking a rating.

Supplier records and compliance status sync with Bullhorn. A supplier that is deficient or expired is flagged on its record, and branch recruiters cannot attach it to a new placement until the corrected document verifies. Deficiency notices go to the supplier and its insurance agent together, naming the client, the endorsement missing and the MSA clause behind the requirement.

Client audits now run from one export: every supplier assigned to that client's facilities, with certificates, endorsements, the verification log and the hold history in a single indexed file.

Results

In the first 60 days, Pikorua Security read 1,310 certificates and state fund documents from 230 suppliers and transport vendors. It found 74 suppliers without an alternate employer endorsement naming the client they were working for, and 41 without the required waiver of subrogation. Every one was resolved or removed from active orders before day 90.

Client audit response went from about two weeks of branch emails to the same afternoon. Average resolution with suppliers' agents fell from 28 days to 4.2 days, and the compliance team, three people supporting 40 branches, estimates 1,100 hours a year returned to it.

Since go-live, no placement has been made through a supplier on hold. Branch managers now get the answer from Bullhorn at the moment they try to staff the order, instead of from the risk team a week later, which the Director of Risk and Compliance calls the change that mattered most.