Workers’ Compensation Alternate Employer Endorsement

A staffing company hires workers and assigns them to a client. A contractor supplies employees to a project owner. A business temporarily borrows staff from an affiliate. In each arrangement, the employee may work under one company’s payroll while performing day-to-day tasks for another organization. An alternate employer endorsement is a workers’ compensation policy endorsement designed for a defined version of that exposure.

The endorsement is not a generic certificate statement and does not automatically cover any organization that receives labor. It identifies an alternate employer and state in the schedule and applies under specified employment circumstances. The employer should review the policy endorsement alongside the staffing or service contract, employee assignment, and workers’ compensation coverage arrangements of each party.

What the endorsement does

The TDI-posted standard alternate employer form describes coverage for bodily injury to the named insured’s employees while they are in the course of special or temporary employment by the alternate employer in the state named in the schedule. It states that Part One, workers’ compensation, and Part Two, employers liability, apply as though the alternate employer is insured, subject to the endorsement’s terms. The insurer may reimburse the alternate employer for required compensation benefits when direct payment is not permitted.

That language is limited. It does not add every worker at the alternate employer to the policy. The employee must belong to the group insured under the named insured’s policy, perform the described special or temporary employment, work in the scheduled state, and satisfy the policy and endorsement requirements. The actual policy may use a schedule or wording that differs from an old specimen, so confirm the issued form.

The endorsement can matter when the alternate employer faces allegations related to an injury to a supplied worker. It may extend specified workers’ compensation and employers liability protection under the named insured’s policy. But it does not automatically cover the alternate employer’s independent employees, unrelated locations, other states, unrelated operations, or liability claims outside the policy. Nor does it guarantee that every contract requirement has been met.

Who is the named employer and who is the alternate employer?

The named insured is the employer that purchased the workers’ compensation policy. The alternate employer is the organization for which the named insured’s employee temporarily or specially works. A staffing firm may be the named insured and a staffing client the alternate employer. A subcontractor may be the named insured and a general contractor or project company the alternate employer if the facts and endorsement fit. The precise legal entity should be identified rather than relying on a trade name.

The employment relationship can be fact-sensitive. A contract may call a person an independent contractor, temporary employee, leased employee, or borrowed servant, but the actual control, work, payroll, and legal relationship can matter. An endorsement should not be used to paper over worker misclassification or an unclear employer relationship. The parties should confirm who hires, pays, supervises, controls the details of work, reports injuries, and provides benefits.

A client may ask to be named as an alternate employer because it wants evidence that the staffing company’s workers’ compensation policy responds to injuries arising from assignments at the client. That request is distinct from being an additional insured on the staffing company’s CGL policy, receiving a waiver of workers’ compensation subrogation, or obtaining the client’s own workers’ compensation policy. Each request has a separate function and must be addressed under its respective form.

Schedule, state, and operations

The standard endorsement includes a schedule that identifies the alternate employer and the state. The endorsement applies only within that scheduled scope. If an employee is assigned to a different subsidiary, works at another project, or performs work in another state, the parties should not assume the existing schedule follows automatically. A correct legal name and jurisdiction are essential because affiliate names can be similar while representing separate entities.

The TDI specimen says the endorsement does not satisfy the alternate employer’s duty to secure its own workers’ compensation obligations, and that the insurer will not file evidence of coverage for the alternate employer with a government agency. This is a crucial limitation. The endorsement’s extension is not necessarily a substitute for the alternate employer’s own legally required coverage, and a certificate or endorsement does not establish compliance with every statutory filing obligation.

A multistate staffing assignment requires special review. Workers may travel, perform remote work, or cross state lines. Each state has its own workers’ compensation rules and the policy’s other-states provisions and endorsements may affect coverage. The alternate employer endorsement’s state schedule may not include every place where the employee works. The agent should obtain the states of work before binding and confirm the proper policy and endorsements.

Part One and Part Two are related but distinct

Part One provides workers’ compensation insurance as required by the applicable workers’ compensation law for covered employees, subject to the policy. Part Two employers liability addresses certain employer-liability claims that are not simply workers’ compensation benefits. The alternate employer endorsement’s reference to both parts can extend protection for its defined exposure, but limits, exclusions, and insuring agreements remain relevant.

Employers liability is not a general liability policy. It concerns certain claims arising from employee injury and may have separate limits for each accident, disease per employee, and disease policy limit. The alternate employer should ask how defense and indemnity work, whether the named insured’s employees are included, what other-insurance provisions apply, and how the contract allocates responsibility. The endorsement does not turn the alternate employer’s unrelated CGL claims into covered workers’ compensation claims.

How it differs from common related forms

Example: staffing agency and warehouse client

A staffing agency employs warehouse pickers and assigns them to a client’s Texas distribution center for a four-month peak season. The agency’s policy lists the warehouse client as alternate employer in Texas. A worker is injured while performing the assigned warehouse work. The endorsement may extend specified Part One and Part Two treatment to the client for that worker’s injury, subject to the policy and schedule. The client should still confirm its own legal coverage duties and the contract’s insurance requirements.

Suppose the client has a sister company that operates a second warehouse. If the sister company is not the scheduled alternate employer and does not fit a blanket definition in the actual form, the first client’s endorsement may not apply to it. Similarly, if the staffing agency sends the employee to a job in another state, the Texas schedule alone may not cover that assignment. An affiliation, shared brand, or common ownership does not automatically make entities interchangeable.

Example: subcontractor at a project site

A subcontractor sends its employee to work under a general contractor’s direction at a construction project. The general contractor requests alternate employer status under the subcontractor’s workers’ compensation policy. The parties should verify the actual employee relationship, the project and state listed, whether the endorsement is issued, and whether it covers the contractually intended work. The subcontractor should also review separate requirements for additional insured status and a waiver of recovery under CGL and workers’ compensation forms.

If an injury occurs, the employer and staffing company should promptly report it under the relevant policy and Texas DWC procedures. A post-loss request to add an alternate employer cannot be assumed to operate retroactively. Keep the assignment agreement, timesheets, payroll records, training documents, site instructions, incident report, and the actual endorsement together so the insurer can investigate the worker’s status and scope of work.

How to request the endorsement correctly

• Identify the named insured, alternate employer’s exact legal name, location, state, and work operation.
• Describe which employees or assignments are involved and when the arrangement starts.
• Provide the staffing, labor, or subcontract agreement and identify its insurance requirements.
• Ask the insurer whether the standard endorsement is available and what schedule wording it requires.
• Confirm the effective date before the employee begins the assignment.
• Verify whether Part Two employers liability applies and what limits are scheduled on the policy.
• Obtain the issued endorsement and check the party, state, and scope for accuracy.
• Review other states, CGL additional-insured, auto, and waiver requirements separately.

Common mistakes

• Assuming a certificate naming a client as holder makes it an alternate employer.
• Treating the endorsement as a replacement for the client’s own legal coverage obligations.
• Failing to schedule the correct affiliated legal entity or state.
• Assuming every worker at a client site is covered by the staffing agency’s policy.
• Confusing alternate employer status with additional-insured status or a waiver of subrogation.
• Assuming the endorsement covers a claim unrelated to the supplied worker’s injury.
• Requesting an endorsement after a loss without checking its effective date.
• Ignoring employers-liability limits and relying only on the workers’ compensation benefit limits.

Administration and form verification

An alternate employer arrangement should include a clear injury-reporting procedure. The worker may report an injury to a supervisor at the client site, while the staffing employer has the insurance contract and payroll record. The contract should tell both parties who must notify the carrier, who completes required employer notices, who coordinates medical care, and who preserves incident evidence. Delay or conflicting accounts can complicate claim administration, but it does not by itself decide whether the employee qualifies for statutory benefits. The insured staffing employer should reconcile assigned-worker records with the endorsement schedule. Keep the employee’s hire date, job title, work location, assignment dates, supervisor, payroll, and state of work. If the client asks for broader coverage than the standard endorsement offers, ask the carrier to explain what can be endorsed and what remains the client’s responsibility. Do not promise that an endorsement makes the client immune from a lawsuit or that every claim will be defended; Part Two’s exclusions, limits, and other terms still matter. The exact specimen form available in a TDI manual is a useful way to learn the structure, but a specimen’s printing date is not evidence that it is the exact form issued today. Texas requires use of adopted workers’ compensation policy language and endorsements under TDI’s rules. Producers and employers should verify the current policy forms, schedule, and effective date with the insurer. If an unusual staffing arrangement does not fit the standard form, the parties should not silently assume a generic endorsement covers it.

At each policy renewal, confirm the staffing contract remains active, the client still uses the same legal entity, and the state and assignment descriptions have not changed. New projects should be reviewed before the first shift.

This simple review can prevent an endorsement from naming an old client while employees report to a new worksite.

Exam takeaway

An alternate employer endorsement addresses a defined relationship in which the named insured’s employees work temporarily or specially for a scheduled organization. The standard form can extend Part One and Part Two as stated, limited by employee status, state, schedule, and work facts. It is not a blanket substitute for the alternate employer’s own insurance, a certificate-only status, or the same thing as a CGL additional insured or waiver of subrogation.

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