What is Alternate Employer Endorsement

An alternate employer endorsement extends workers' compensation coverage to other companies with whom the primary insured may do business. Alternate employer endorsement lists other companies that are to be included in the policy’s coverage in the policy’s endorsement schedule.

BREAKING DOWN Alternate Employer Endorsement

An alternate employer endorsement comes often comes into play when businesses use temporary employment agencies. Businesses may find themselves short-staffed on occasion and will seek out the services of such companies to fill the gaps. Workers employed through the temporary employment agency are covered under the workers' compensation policy that the agency has purchased. When the employee is hired out to an outside firm, the firm that hires the employee will seek an alternate employer endorsement in order to protect it from any lawsuits that the temporary employee may suffer.

The alternate employer endorsement covers injury sustained by employees during their temporary or "special" employment by the alternate employer listed in the endorsement schedule. The schedule must indicate the state in which the temporary workers are employed. The temporary employment agency remains the worker's primary employer. The client is an insured only while the temporary worker is assigned to it. If a contract or project is specified in the schedule, then coverage applies only to work performed by the temporary workers under that contract or at that project.

For example, a delivery company expects that it will experience a higher volume of workload over the holidays, and contacts an employment agency to hire a temporary worker to help out. In order to protect itself from lawsuits that may arise from hiring the temporary worker, the delivery company asks the agency to insure it as an alternate employer in its workers' compensation policy. Several weeks into the job, the temporary employee drops a package on his foot and has to go to the emergency room. The employee will be covered under the agency’s workers compensation policy, and thus cannot make a claim against the delivery company’s liability policy.

Alternate Employer Endorsement and Claims Investigations

When an alternate employer is added to a policy’s endorsement schedule, the employer is often required to assist in any claims investigations. This typically means reporting any injuries that a temporary employee may suffer or ensuring that the employee is given proper medical treatment when the injury is suffered. They must also provide any documentation related to the injury to the policyholder. If the policy is canceled for any reason, the insurance company is not obligated to tell the alternate employer because the alternate policyholder is not the primary party on the policy.