For IT Staffing Firms, Failing to Verify Candidates’ Technical Skills Presents the Biggest Risk, Says New TechInsurance Alert

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IT staffing firms face liability risks for work completed by placed staff members.

IT staffing firms are often unaware that they face risks that spring from the actions of employees they place. [...] If a gap in skills results in a data breach, it becomes a nightmare for both the small business and the IT staffing firm.

Cyber security is a hot topic these days, with concerns of impending attacks affecting decisions at every organization, from the federal government to small and micro businesses. IT safety and security have never been more important, which means that more small and micro businesses are turning to IT staffing firms for the IT security experts they need to keep their data safe.

With this increased demand for IT staffing firms’ services, however, comes an increased exposure to potential liability. A new alert issued today from TechInsurance, the nation’s leading online insurance provider for information technology businesses, warns IT staffing firms of their liability in placing a candidate who may have misrepresented his or her skills, thereby putting a client’s network and data at risk.

“IT staffing firms are often unaware that they face risks that spring from the actions of employees they place,” said Ted Devine, CEO of TechInsurance. “Once a job candidate is placed in a trusted position, they not only have access to sensitive information but, oftentimes, have the responsibility for keeping everyone else out. If a gap in skills results in a data breach, it becomes a nightmare for both the small business and the IT staffing firm.”

Matt Prevost, assistant vice president at Philadelphia Insurance Companies, notes that many IT staffing firms place a greater emphasis on checking references and conducting background checks than on verifying particular technical skills.

“This can be a critical error as IT staffing firms face more liability from placing an unskilled employee whose work facilitates or fails to prevent cyber crime, data breaches, or identity theft than they do from placing someone with a checkered past,” Prevost said.

Along with the alert, TechInsurance outlined the following important reminders for IT staffing firms:

  •     Contracts are crucial. For the purposes of mitigating risk, IT staffing firms should get clarity about the specific skills their staffed employees will be expected to have and what services they’ll be expected to deliver. In the event of an Errors & Omissions (E&O) lawsuit related to work done by a staffed employee, the staffing firm may need to clearly demonstrate how they verified these specific skills to fend off liability claims.
  •     Clients’ coverage demands affect a staffing firm’s coverage needs. IT staffing firms must consider E&O risks from multiple sources: every placed worker might have contact with dozens of clients, each of whom has different demands and expectations regarding E&O liability. Staffing outfits should be aware of the E&O limits their clients’ clients demand; these limits give an idea of what kind of exposure staffing firms themselves could face in the event of a lawsuit.
  •     Employment Practices liability exposure exists, too. While Errors and Omissions exposure is the most visible source of risk for IT Staffing firms, they should also be aware of the threat of lawsuits relating to Employment Practices liability. Staffed workers who initiate suits alleging negligent hiring decisions, mismanagement of benefits, discrimination, wrongful termination, and other EPLI-related issues could easily name the IT staffing firm that placed them in addition to their current employer.

TechInsurance helps IT staffing firms, as well as other small and micro technology businesses access to the nation’s most respected, A-rated business insurance carriers as well as industry-trained licensed insurance agents experienced in identifying the insurance products to meet their unique needs. For more information on TechInsurance’s offerings, please visit http://www.techinsurance.com.

About TechInsurance
TechInsurance is a web-based insurance agent that offers IT businesses and professionals fast, easy, one-stop shopping for all their business liability insurance needs. TechInsurance was founded in 1997 in response to the difficulty IT services firms had finding high-quality, affordable business insurance. With more than 51,000 businesses insured since 1997, the company has grown to become America's leading online provider of business and professional insurance for computer consulting and web services companies, as well as other IT service businesses. For more information, visit http://www.techinsurance.com.

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