Question from an IIABNY member: I am looking to you to help clarify a question I have regarding a “temporary worker” exclusion currently attached to one of my clients policies, attached is a copy for your reference.
My insured’s policy is written without a “labor law” or “employee injury” exclusion which she paid a lot more for and is very important because she is a “sub-contractor” for many large companies and signs many project contracts. At the time the policy was written the attached “temporary employee” exclusion did not seem to present too much of an issue because the insured did not anticipate any time that she would need to hire a temporary employee, that is until now. So a few days ago my insured sent me the attached labor firm contract asking me for a certificate of insurance so I immediately went to the carrier for information pertaining to this “temporary employee” exclusion currently on the policy and below is the email thread for your reading pleasure.
In your opinion if the insured does proceed with this labor firm and takes on 2 people to help her out now that she is busier than she thought will she have a gap in coverage if a labor law or third party over action suit would come up or would the labor firm be held responsible since technically they are not her employees? Attached is the labor firm contract for your reference.
Answer: This endorsement excludes Labor Law claims and other injury claims involving temporary workers.
NY Labor Law Sections 240(1) and 241(6) apply to owners, contractors and their agents (i.e., those who have the authority to hire subcontractors and to direct and control the work.) These entities must provide certain devices to workers engaged in certain specific activities, and the devices must provide “proper protection” to the workers. If a worker’s injury is caused at least in part because a device did not provide proper protection, the entities are legally liable; the worker does not have to prove they were negligent.
While the law does not permit these entities to delegate the legal responsibility for compliance, the entities may transfer the financial responsibility for violations. Typically, they do this by requiring downstream parties to name them as additional insureds under the downstream parties’ CGL polices and/or requiring them to sign hold harmless agreements. This is how an injury to one of the named insured’s employees gets covered by the CGL – the additional insured seeks coverage, and the employers’ liability exclusion does not apply because the injured person is not an employee of the additional insured.
The endorsement on your client’s policy says:
“This insurance does not apply to ‘bodily injury’ or ‘personal and advertising injury’ to any:
1. ‘Temporary worker’;…
For the purposes of this endorsement only, ‘temporary worker’ means:
A person who is furnished to any insured to substitute for a permanent ‘employee’ on leave or to meet seasonal or short-term workload conditions; however, ‘temporary worker’ does not include a person who is furnished to any insured by a labor union to substitute for a permanent ‘employee’ on leave or to meet seasonal or short-term workload conditions.”
A temporary worker is one furnished to any insured (named insured or otherwise), and the exclusion applies to any temporary worker. It’s interesting to contrast this with the employers’ liability exclusion in the ISO CGL policy:
This insurance does not apply to: …
"Bodily injury" to:
(1) An "employee" of the insured arising out of and in the course of:
(a) Employment by the insured; or
(b) Performing duties related to the conduct of the insured's business …
This exclusion does not apply to liability assumed by the insured under an "insured contract".
This exclusion does not apply in most scaffold law cases because 1) the injured employee is not an employee of the insured (the owner or GC), and 2) the exclusion does not apply to liability assumed under an insured contract (the hold harmless agreement).
The endorsement on this policy concerns me because it applies to injury to any temporary worker, not just a temporary worker of “the insured.” Suppose a temp gets hurt on the job and sues the GC. The GC is an additional insured under the employer’s CGL policy. The GC submits the claim to the insurer. The insurer cites the endorsement – “insurance does not apply to bodily injury to any temporary worker” (unless furnished by a union.) Any means any. Also, note that the endorsement does not include an exception for liability assumed under an insured contract. Essentially, if a temp worker gets hurt and sues any of the insureds, there is no coverage.
I agree with the underwriter’s statement that this is not a Labor Law exclusion – it applies to injuries arising out of ordinary negligence, too. It’s not limited to Labor Law. However, in my opinion it would certainly exclude coverage for any scaffold law claims involving a temp.