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Employers May Need to Include Temps and Independent Contractors Under Insurance Policies

Even if an employer does not consider a temp or independent contractor an employee of the company, it still may bear responsibility for covering the individual under its insurance policies.

The U.S. Court of Appeals, 4th Circuit, in Interstate Fire & Cas. Co. v. Dimensions Assurance Ltd., recently held that a nurse employed by a staffing agency and assigned to work at a hospital qualified as a hospital “employee” under the hospital’s professional liability insurance policy despite the hospital insurer’s arguments to the contrary.

This ruling underscores a critical point: how an employer classifies a worker, as an employee or independent contractor, is not determinative for purposes of compliance with applicable law or coverage under insurance policies. Instead, whether a worker is entitled to the benefits of law or an insurance contract depends on meeting various fact-specific tests that analyze the relationship between the employer and the worker and the employee’s business outside of that relationship.

Relying on the definition of employee under Maryland’s common law, the court in Interstate Fire & Cas. Co. explained the term “employee” for purposes of coverage under the hospital’s insurance policy includes those workers who qualify as employees under the right-to-control test. The right-tocontrol test provides that a worker is an employee when the employer controls and directs the method by which the work is accomplished, not just the end result.

This is true without regard to how those workers may be classified by a staffing or temp agreement executed between an employer and agency. Because the nurse supplied to the hospital by the staffing agency was held also to be a hospital employee, the hospital had an independent obligation to provide the nurse with professional liability coverage under its policy.


Although Interstate Fire & Cas. Co. was decided in the professional liability insurance context, the 4th Circuit made broad findings as to the meaning of “employee” under Maryland common law. In light of the court’s opinion, whether an employer classifies a worker as an employee or independent contractor is not determinative, as proper classification will be based on the relationship between the employer and the worker. Employers who use temps and staffing agencies must examine those relationships without regard to how they may classify those workers, or they may find they have not provided the appropriate insurance or liability coverage and face the resulting consequences.

Josh Schmand is a litigation and employment attorney who works on complex business, corporate, and commercial disputes, as well as employment matters, advising clients on the risks and benefits of litigation, preparing for trial when needed, and serving as a determined advocate. For more information about Maryland employment law, contact Josh at (301) 347-1273 or


This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.


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