Temporary Workers and Alternate Employer Endorsement

Welcome to the wild world of temporary workers, where people can be on your shop floor, wear your logo, use your equipment, report to your supervisor… and still not actually be your employees on paper. That setup is convenient for staffing flexibility, but it can create serious questions when someone gets hurt on the job or sues for workplace injuries.

That’s where the Alternate Employer Endorsement (AEE) quietly steps in. It’s a small piece of language added to a workers’ compensation policy, but it can make a huge difference in who gets protected and which insurer pays when a temporary or leased worker is injured while working for a client company.

In this in-depth guide, we’ll break down what temporary workers are, how an Alternate Employer Endorsement works, why client employers almost always ask for it, and the practical do’s and don’ts from real-world experiences. We’ll keep it clear, useful, and just light enough that you don’t fall asleep on your keyboard.

Temporary Workers 101: Who Are We Talking About?

A temporary worker (or “temp”) is typically hired through a staffing agency or temp firm and assigned to a client company for a limited period. They might fill in for seasonal demand, cover an employee on leave, or provide specialized skills for a project.

In many arrangements:

• The staffing agency is the official “employer of record.”
• The temp works day-to-day under the supervision of the client company.
• The client company controls the worksite, machinery, schedules, and safety practices.

Legally and financially, this split can be messy. If a temp worker gets hurt:

• Is the workers’ compensation claim handled by the staffing agency’s policy?
• Can the temp sue the client company as a “third party” if they’re not technically that company’s employee?
• Does the client company’s liability policy respond, or is the workers’ comp carrier on the hook?

The answer often depends on how well the relationship is documented and whether the staffing firm has added an Alternate Employer Endorsement naming the client.

What Is an Alternate Employer Endorsement?

An Alternate Employer Endorsement is language added to a workers’ compensation and employers’ liability policy to treat a scheduled “alternate employer” (for example, the client company using temp workers) as if it were an insured for injuries to the staffing firm’s employees while they are working for that alternate employer.

Put in plain English, it says: “We, the insurer, agree that when our insured’s employees are working for that company over there (the alternate employer), we will treat that company as if it’s also insured under this policy for those workers’ injuries.” The endorsement gives the alternate employer access to primary workers’ compensation and employers’ liability coverage for those specific workers and assignments.

In the standard national council (NCCI) world, the form is commonly known as WC 00 03 01 A – Alternate Employer Endorsement or a very similar code depending on the state. Insurers, workers’ compensation rating bureaus, and many underwriting manuals reference this form as the standard mechanism for extending coverage to a client employer that is using temporary or leased workers.

How WC 00 03 01 A Works in Practice

While exact wording can vary slightly by state, most Alternate Employer Endorsements share a few core ideas:

• Coverage is limited to temporary or special employment. The endorsement applies only while the staffing firm’s employees are in the course of temporary or special employment by the alternate employer at the location(s) listed in the schedule.
• Workers’ comp and employers’ liability apply as if the alternate employer were insured. For those specific workers, Part One (Workers’ Compensation) and Part Two (Employers’ Liability) of the policy treat the alternate employer as if its name were on the front of the policy.
• The endorsement typically does not satisfy the alternate employer’s duty to insure its own employees. Client companies still must carry workers’ comp for their own direct employees; the endorsement only applies to the staffing firm’s employees.
• The insurer usually agrees not to seek contribution from the alternate employer’s other insurers. In many versions, the carrier promises it will not ask any other insurer of the alternate employer to share in a covered loss related to the temporary workers.

In short, the Alternate Employer Endorsement is a targeted risk-transfer tool. It clarifies that injury claims from those temporary workers should run through the staffing firm’s workers’ comp policy, while still protecting the client employer as if it were insured for those employees.

Why Client Employers Ask for an Alternate Employer Endorsement

From the client company’s perspective, hiring temps brings flexibility but also fear: “What if this worker we didn’t technically hire sues us?” So contracts between staffing firms and clients often include clauses that require:

• The staffing firm to maintain workers’ compensation coverage for its employees.
• The client company to be named as an “alternate employer” on the workers’ comp policy.
• Certificates of insurance showing the endorsement is in place.

There are several reasons client employers push for this:

1. Protection from Lawsuits by Temporary Workers

If a temporary worker is injured, workers’ compensation is intended to be the exclusive remedyno lawsuit, just benefits. However, things can get complicated if the worker argues the client company is a separate, negligent third party rather than the employer.

With an Alternate Employer Endorsement, the client employer is treated more like an employer under the workers’ compensation policy for those injuries. That supports the argument that the workers’ comp policy is the primary remedy and helps shield the client from separate liability suits by those temps.

2. Closing Coverage Gaps for Leased or Assigned Workers

Laws and court decisions in some states distinguish between staff-leasing arrangements and truly temporary help. Without clear documentation, client companies might find that leased or temporary workers don’t neatly fit into one category, which can open up arguments about who is responsible for workers’ comp benefits.

The Alternate Employer Endorsement helps tighten things up by explicitly stating that the staffing firm’s policy extends to the client employer for injuries to those particular workers while on assignment.

3. Contract Compliance and Risk Transfer

Many large buyers of staffing serviceshospital systems, manufacturers, logistics firms, and tech companiesrely on carefully drafted contracts that shift certain risks back to the staffing firm. Requiring an Alternate Employer Endorsement is one of the cleanest ways to document that the staffing firm’s workers’ comp policy is intended to respond first for injuries to its own people, even while they are working on-site at the client.

Key Features and Limitations You Should Know

The Alternate Employer Endorsement is powerful, but it is not a magic force field. Employers and staffing agencies need to understand both its strengths and its boundaries.

What the Endorsement Typically Does

• Extends workers’ comp coverage to the alternate employer. For the named temporary workers and locations, the endorsement makes it clear that the alternate employer is covered for workers’ comp benefits related to those employees’ injuries.
• Extends employers’ liability coverage for those workers. If a claim somehow moves into the employers’ liability arena (for example, certain third-party or dual-capacity claims), the client employer can be treated as if it were insured for those temps under Part Two.
• Clarifies which policy responds to injuries. The staffing firm’s policy responds to injuries suffered by its employees while assigned to the alternate employer, minimizing coverage disputes between carriers.
• Usually waives contribution from other insurers of the alternate employer. Many forms specify that the workers’ comp carrier will not ask any other insurer of the alternate employer to share in a loss that falls under the endorsement.

What the Endorsement Does Not Do

• It does not replace the client employer’s own workers’ comp policy. Client companies still need their own workers’ compensation coverage for their regular employees. The endorsement only applies to the staffing firm’s employees.
• It does not turn every worker at the site into a covered temp. Coverage is limited to employees of the named insured (the staffing firm) while they are in temporary or special employment by the alternate employer, in the state(s) and at locations shown in the schedule.
• It is not the same as being an “additional insured” on a general liability policy. Workers’ comp policies are structured differently; the Alternate Employer Endorsement is the proper mechanism for extending comp coverage to a client employer, not additional insured language on a GL policy.
• It does not erase safety obligations. The client employer still has OSHA and safety responsibilities for everyone on its job site, regardless of who signs the paychecks.

Real-World Scenarios: How the Endorsement Plays Out

Scenario 1: Staffing Agency and Manufacturing Plant

A staffing agency supplies ten temporary workers to a manufacturing plant. The workers are on the staffing agency’s payroll, but they operate the plant’s machinery, follow the plant’s procedures, and report to the plant’s supervisors.

One worker suffers a serious hand injury while operating a press. Because the staffing firm carries workers’ compensation and has added the plant as an alternate employer, the claim is handled through the staffing firm’s workers’ comp policy. The plant is treated as if it were insured for that injury under that policy, making it harder for the worker to successfully sue the plant as a third party.

Scenario 2: Contractor–Subcontractor Relationship

A general contractor hires a subcontractor who provides its own employees for work on a construction site. The contractor requires the subcontractor to add the contractor as an alternate employer. When a subcontractor’s employee falls from scaffolding, the subcontractor’s workers’ comp policy (with the endorsement) responds. The contractor gains protection much like an employer, even though the worker is not directly on its payroll.

Scenario 3: Healthcare Facility Using Temp Nurses

A hospital uses a nurse staffing agency to fill gaps on night shifts. The nurses are on the staffing agency’s policy, and the hospital is listed as an alternate employer for all its locations. If a nurse slips and falls while working in the ICU, the staffing agency’s workers’ comp coverage responds, and the hospital enjoys employer-like protection for that injury as scheduled in the endorsement.

Best Practices for Staffing Firms and Client Employers

For Staffing Agencies and PEOs

• Know your contracts. Review client agreements with your broker and legal counsel to understand exactly when you are required to provide an Alternate Employer Endorsement, and for which entities and locations.
• Keep your schedules accurate. Make sure all client names, addresses, and locations are correctly listed on the endorsement schedule. Mistakes here can create uncertainty or disputes at claim time.
• Track states and job types. If your temps work in multiple states or higher-hazard industries, confirm that those exposures are properly disclosed and priced in your workers’ comp program.
• Coordinate injury reporting. Have clear procedures so that client supervisors know to report any injuries to you quickly. The faster you can notify your carrier, the smoother the claims process usually is.

For Client Employers Using Temporary Workers

• Require the endorsement in writing. Your staffing contract should clearly require the staffing agency to add you as an alternate employer where appropriate and to provide updated certificates of insurance.
• Ask for copies of the actual endorsement if needed. Certificates are useful, but they’re not the policy. For large or high-risk arrangements, it may be worth reviewing the actual endorsement form.
• Maintain your own workers’ comp coverage. Remember, the endorsement doesn’t cover your direct employees. You still need your own policy.
• Don’t relax on safety. Temporary workers are often new to your facility, your procedures, and your equipment. Strong onboarding, training, and supervision are essentialboth ethically and financially.

Common Misunderstandings About Temporary Workers and AEEs

“If the staffing firm has workers’ comp, I’m automatically protected.”

Not necessarily. Without clear contractual language and, in many cases, an Alternate Employer Endorsement, there may be room for disputes about who is really responsible for workers’ comp benefits or whether a worker can pursue a third-party claim.

“The AEE means I don’t need to worry about my own policy.”

Incorrect. The endorsement typically addresses only the staffing firm’s employees. Your own workers, and your statutory obligations toward them, are still your responsibility under your own workers’ comp coverage.

“It’s the same thing as being an additional insured.”

Workers’ compensation doesn’t use “additional insured” in the same way general liability does. The Alternate Employer Endorsement is a separate tool in the workers’ comp world, designed specifically for these shared-employment or temporary-employment situations.

Experience-Based Insights with Temporary Workers and Alternate Employer Endorsements

Theory is nice, but in real workplaces, temporary staffing and Alternate Employer Endorsements are learned through experienceoften the hard way. Here are some practical lessons and patterns that risk managers, agents, and employers commonly report when dealing with temps and AEEs.

1. The “We Thought They Were Their Employees” Surprise

A classic scenario goes like this: a client company brings in a handful of temps from a staffing agency. Everyone assumes, “They’re on the agency’s payroll, so the agency will handle any injuries.” Then a serious injury happens, and suddenly the question is, “Who reports this? Which policy responds? Are we getting sued?”

When the AEE is in place and the relationship is clearly documented, the claim tends to move more smoothly. The staffing agency’s carrier recognizes the client as an alternate employer, and the injured worker is treated as if they were the agency’s employee for comp purposeseven though they were taking orders from the client’s supervisors. Without the endorsement, there can be weeks of finger-pointing and frustration while everyone figures out whose coverage should apply.

2. Onboarding Makes or Breaks Outcomes

One of the most common real-world problems with temporary workers is rushed onboarding. It’s tempting to think, “They’re only here a few weeks; we don’t have time for a full safety orientation.” Unfortunately, injuries love to happen exactly in those gaps.

Employers that do best with temporary workers tend to treat them almost exactly like new hires when it comes to safety:

• They provide a brief but focused orientation on hazards, PPE, and emergency procedures.
• They assign a “buddy” or mentor for the first few shifts.
• They make sure temps know who to report to and how to report unsafe conditions.

Even though the staffing agency is the employer of record, the worksite employer controls the environment. When both sides understand their roles and the AEE is in place, they’re more likely to view safety and claims handling as a shared responsibility rather than a blame game.

3. Communication Between HR, Safety, and the Broker Is Critical

Many coverage problems with Alternate Employer Endorsements don’t arise from bad intentions; they come from poor communication. HR may negotiate a contract requiring the AEE, but never send the final wording to the insurance broker. The broker may place workers’ comp for the staffing agency, but never hear which client needs to be added. The safety manager may not even know temps are coming until they show up at the door.

A smoother system usually looks like this:

• Legal or procurement negotiates contracts and flags any insurance and endorsement requirements.
• HR or contract managers send those requirements promptly to the broker or insurer.
• The broker ensures the alternate employer is properly scheduled on the AEE, including correct names, addresses, and states.
• Safety and operations are notified that temps are coming and what tasks they will perform.

When everyone is on the same page, an injury to a temporary worker becomes a managed event instead of a crisis with surprise bills and disputes.

4. Claims Handling: The “Who Does What” Question

Another common real-world pain point: a temp worker gets hurt, the client employer sends them for treatment, writes up an internal incident report, and then assumes the staffing agency will magically know about it.

Best practice is to define reporting responsibilities in advance:

• The client employer promptly notifies the staffing firm of any injury, providing details, witness statements, and its internal report.
• The staffing firm files the formal workers’ comp claim with its carrier and handles ongoing communication with the adjuster.
• Both sides coordinate on return-to-work options, light duty, and any workplace modifications needed.

With an Alternate Employer Endorsement in place, the rights and duties of each party are clearer, which makes it easier to cooperate instead of arguing over who “owns” the claim.

5. Audits and Premiums: No Free Lunch

From the staffing agency’s side, it’s important to remember that adding an Alternate Employer Endorsement doesn’t come free. The agency’s workers’ comp premium is usually based on payroll and classification for those temp workers, including the work they perform at the client’s locations.

In practical terms, that means:

• Accurate job descriptions and risk classifications are critical when quoting and renewing coverage.
• If a client shifts temps into more hazardous tasks without telling the staffing firm, the audit can get expensiveand ugly.
• Good documentation and honest communication about job duties protect both the staffing firm and the client from surprise costs later on.

Clients benefit from the protection the AEE provides, but they should expect to pay appropriate rates to the staffing firm for higher-risk roles. “We needed a receptionist and somehow ended up with someone operating a crane” is not a pleasant surprise for an underwriter.

6. The Bottom Line: Plan Before You Hire, Not After Someone Gets Hurt

The biggest experiential takeaway is simple: don’t treat temporary workers and Alternate Employer Endorsements as an afterthought. Whether you’re a staffing agency, a PEO, or a client employer, you should think through:

• Who is the employer of record?
• Who is responsible for workers’ comp coverage?
• Is there an Alternate Employer Endorsement naming the client company?
• How will injuries be reported, documented, and managed?
• Are safety responsibilities clearly understood on both sides?

When these questions are answered before the first temp badges into your facility, you’re in good shape. When they’re answered for the first time in an emergency room waiting area, things tend to get much more stressfuland significantly more expensive.

Conclusion

Temporary workers are a key part of today’s flexible workforce, but they can create complicated questions about who is responsible when something goes wrong. The Alternate Employer Endorsement is one of the most important tools for dealing with those questions. It extends workers’ compensation and employers’ liability protection to the client employer for injuries to the staffing firm’s employees, while clarifying which policy is intended to respond.

For staffing agencies, the endorsement documents that they are taking responsibility for work injuries to their employees, even when those employees are working at client sites. For client employers, it reduces the risk of being blindsided by lawsuits or coverage disputes when a temp is hurt on the job.

Combined with clear contracts, strong safety practices, and good communication between HR, safety, legal, and risk management, the Alternate Employer Endorsement turns a potentially messy “Who pays?” situation into a much more predictable outcome. In a world where work arrangements keep getting more complex, that kind of clarity is worth a lot.