Staffing agencies can be held liable for many employment-related issues. It is critical for both the hiring company and the staffing agency to understand the potential liability issues they face. A well-designed contract must be approved and signed by all parties to ensure there are no misunderstandings. The contract must consider many legal issues.

Statute Violations

Private employment agencies must comply with statutes that govern their operations. Violations can result in staffing agency liability claims. Examples of violations include such things as discrimination and harassment of clients. Failure to seek an operating license is another common violation example. 


If the agency makes a false claim about the employer’s benefits program or promises a wage that hasn’t been agreed upon, they may be sued.

Breach of Contract

To reduce the liability that staffing agencies face, all candidates must agree to the contract before they are placed with an employer. If the agency gives false information about such items as fees the client must pay, however, they could be sued.

Both clients and employers may seek legal action against the staffing agency, so it is critical for the agency’s owner to speak with their insurance agent about proper protection for the risks they face.

Protect your agency and your employees with a comprehensive liability insurance package.