Who Applies for Workers' Compensation in Employee Leasing?

Who Applies for Workers' Compensation?

In an employee leasing arrangement, the leasing company—often called the employee leasing or staffing firm—usually files workers' compensation claims for the employees it leases. The client, the business that hires the leased workers, may also need to file or co‑pay for coverage, depending on state law and the lease agreement.

Leasing Company's Role

The leasing firm is the employer of record for the leased workers, which means it holds the legal responsibility for payroll, taxes, and insurance. Consequently, it submits workers' compensation claims to the state insurance carrier when an injury occurs. The lease contract often requires the leasing company to maintain workers' compensation coverage for all leased staff, ensuring that injured workers receive benefits without delay.

Client's Obligation

Many states mandate that the client— the company using the leased employees—contributes to the workers' compensation premium or provides proof of coverage. Even if the leasing company files the claim, the client may be responsible for paying a portion of the premium or for covering claims that arise while the employee is performing work for the client. Lease agreements typically outline these financial responsibilities.

State‑Specific Variations

Workers' compensation regulations differ by state. In some jurisdictions, the client is the primary insurer and must file claims, whereas in others the leasing company is solely responsible. Reviewing the state's workers' compensation statutes and the lease agreement is essential to determine who must file claims and who pays premiums.

Best Practices for Both Parties

Leasing firms should maintain up‑to‑date insurance records and provide clients with proof of coverage. Clients should review their lease agreements for clauses on workers' compensation and verify that the leasing company is properly insured. Clear communication about claim procedures helps prevent disputes and ensures injured employees receive timely benefits.