1. Forms
2. WC
3. WC-00-03-00

Form WC 00 03 00: Alternate Employer Endorsement

1. What the form is

The Alternate Employer Endorsement (WC 00 03 00, often seen with a state-specific edition date like WC 00 03 01 A) is a crucial endorsement to a Workers' Compensation and Employers Liability insurance policy. Its primary purpose is to extend coverage to an employee who is leased or "loaned" to another employer, known as the alternate or special employer. This endorsement treats the alternate employer as an insured under the policy for liabilities arising from injuries to the leased employee. Essentially, it clarifies which policy will respond if a leased employee is injured while working for the alternate employer. The endorsement ensures that Part One (Workers' Compensation Insurance) and Part Two (Employers Liability Insurance) of the policy apply as though the alternate employer is an insured. However, it's important to note that this endorsement does not satisfy the alternate employer's own statutory duty to secure workers' compensation insurance for its direct employees.

2. Classes of business it applies to

This endorsement is particularly relevant in situations involving:

• Temporary Staffing Agencies or Professional Employer Organizations (PEOs): This is a very common scenario where the staffing agency (the primary insured) provides employees to a client company (the alternate employer). The client company will often require the staffing agency to add this endorsement to protect them from claims by the leased employees.
• Contractors and Subcontractors: A general contractor might require a subcontractor to add this endorsement naming the general contractor as an alternate employer. This protects the general contractor if an employee of the subcontractor is injured on the job site and attempts to claim against the general contractor. For example, an oil company (alternate employer) might require a contractor (insured) to provide this endorsement.
• Property Management: A property owner (alternate employer) might require a property management company (insured) that hires and supervises employees working on the property to include this endorsement. This protects the property owner from claims brought by the property management company's employees.
• Employee Leasing Arrangements: Any situation where an employee of one company performs work under the direct control and supervision of another company can create a "borrowed servant" or "special employer" relationship, making this endorsement necessary.

3. Special considerations

Several important points need to be considered when using the WC 00 03 00 endorsement:

• Borrowed Servant Doctrine: The "borrowed servant" doctrine is a key legal concept here. It determines when an employer who borrows an employee becomes responsible for that employee's work-related injuries. This endorsement helps clarify insurance coverage in these complex situations. The "vital test" often involves determining who has the right of control over the employee's work.
• Contractual Requirements: Often, the requirement for this endorsement is driven by contracts between the primary insured and the alternate employer. The alternate employer will want to be protected under the primary employer's workers' compensation policy.
• State Variations: While the form is applicable in all states, specific rules or interpretations might vary. The endorsement typically applies only if the state of temporary or special employment is listed in Item 3.A. of the Information Page of the policy.
• Specificity: The alternate employer must be specifically named in the endorsement's schedule. However, if the insured is in the business of providing temporary workers, the schedule may use broader terms like "all" or "any" to refer to alternate employers. The endorsement can also be limited to specific jobs or contracts.
• No Filing on Behalf of Alternate Employer: The insurer will not file proof of this insurance with any government agency on behalf of the alternate employer.
• No Contribution from Other Insurers: The insurer will not seek contribution from any other insurer of the alternate employer for a loss covered by this endorsement.
• Cancellation: The policy can be canceled according to its terms without sending notice to the alternate employer.
• Assigned Risk Market: This endorsement is generally available for employers in the assigned risk market, except for PEOs and temporary staffing agencies in some cases, when contractually required by their customers.

4. Key information for agents and underwriters

Agents and underwriters should be mindful of the following:

• Risk Assessment: The underwriter needs to assess the exposure presented by the alternate employer's operations where the leased employee will be working. The nature of the work performed for the alternate employer is critical.
• Pricing: Premium will be charged for the primary insured's employees while they are in the course of special or temporary employment by the alternate employer. The premium is owed by the general employer (the named insured).
• Coverage Gaps: It's crucial to ensure that the alternate employer understands this endorsement does not replace their own workers' compensation policy for their direct employees. This endorsement only applies to the leased employees of the named insured.
• Underwriting Guidelines: Insurers will have their own underwriting guidelines for when they are willing to provide this endorsement. This may depend on the financial stability and loss history of both the named insured and the proposed alternate employer.
• Clarity of Operations: Ensure a clear understanding and documentation of the relationship between the named insured and the alternate employer, including the nature of the work being performed by the leased employees and the state(s) of operation.
• Related Forms: The WC 00 00 00 (Workers Compensation and Employers Liability Insurance Policy) is the base policy to which this endorsement is attached. Understanding the base policy is essential for understanding the effect of the endorsement.