Workers' Comp for Houston Staffing and Temp Agencies

You are the employer of record, so the comp exposure follows every placement into every client site — and the client controls the working conditions you are being rated on.

A staffing agency’s workers’ compensation problem is not the same problem every other employer has, and it is not a matter of scale. You are the employer of record. The comp exposure follows every placement into every client site — and the client, not you, controls the working conditions you are being rated on.

That single structural fact drives everything below: how your rate is set, why your audit came back higher than your estimate, what your clients keep asking you to endorse, and why your experience modifier behaves differently from a business that employs everyone under one roof.

The coverage itself — what it does, what it costs you in duties, what happens at a lapse — sits on our workers’ compensation page. This article is the staffing-specific half. And if you are still deciding whether to carry comp at all, that is a separate question — though for a staffing agency it is usually settled by the client contract before the economics get a hearing.

You carry the risk for work you do not supervise

You employ the worker. The client directs the work. Underwriters price that gap, and they price it carefully.

Placement mix drives your rate more than headcount does. Two agencies with identical headcount and identical payroll can be rated very differently, because one places clerical staff into offices and the other places laborers into warehouses. The rate follows the work.

A single high-hazard client can reprice the whole book. Take on one industrial account with meaningful payroll and your weighted exposure moves, whatever the rest of your placements look like. This is worth modeling before you sign the account, not after the renewal quote arrives.

Client-site safety practice becomes your loss experience. You do not run their floor, write their lockout procedure, or choose their equipment. You do carry the claims that come out of it. The agencies that manage this well treat client site safety as something they inspect and document before placing, because the alternative is finding out through a claim.

Class codes are the whole ballgame

If you take one operational point from this article, take this one. Payroll is assigned by the work actually performed, not by the description of your business.

An agency that reports all of its payroll under a single staffing description is not describing its risk, and the correction is not optional. Clerical placements and industrial placements are different class codes carrying materially different rates. A properly built staffing schedule is usually long, because it reflects the work rather than the entity.

Two consequences follow, and both cost money:

Misassignment surfaces at audit, and the correction is retroactive. The auditor is not looking at what you estimated. They are looking at what your records show people actually did, and reclassified payroll is repriced from the start of the policy term. An agency that under-reported hazardous payroll for a year does not get a warning; it gets a bill.

Governing class code logic can move under you. As your placement mix shifts, the code carrying the largest share of payroll can change, and that has knock-on effects on how the rest of the schedule is treated.

On rates themselves: comp is priced as a rate per $100 of payroll in each class code, multiplied by that payroll, then adjusted by your experience modifier. That structure is durable and worth understanding. We do not publish class code rate figures, because the number that matters is the one a carrier files for your specific codes in your specific year, and a band copied from somewhere else is not information — it is decoration.

The audit is where staffing agencies get hurt

The payroll audit reconciles what you estimated against what you actually paid, code by code. For most businesses this is administrative. For staffing agencies it is where the year is won or lost, and there are four recurring reasons:

1. Payroll lands in a different code than it was estimated in. See above. This is the big one.
2. Overtime is treated differently than you assumed. How overtime pay is handled in the premium base is a rule, not a preference, and getting it wrong in your estimate produces a surprise at reconciliation.
3. Subcontracted and 1099 labor gets reclassified as your payroll. If you cannot produce a certificate of insurance showing that a subcontracted party carried its own coverage, the auditor can and often will treat that payroll as yours and charge for it.
4. Missing certificates at audit. Same mechanism, and it is entirely a records problem rather than an insurance problem.

The habit that prevents all four is unglamorous: keep records per placement, not per client. A client file tells you who you billed. A placement record tells you what work was performed, under which code, for how many hours, by whom — which is exactly what the auditor is reconstructing, and reconstructing it a year late from invoices is how agencies end up conceding positions they could have defended.

Alternate employer endorsements and what clients actually ask for

This is where your comp policy meets the client contract, and it is the request staffing agencies field most often.

An alternate employer endorsement extends your workers’ compensation policy’s protection to a named client, as though that client were the employer, for injuries to the workers you place there. Clients ask for it because it protects them from being pulled into a claim brought by someone on your payroll working under their direction.

Two things about it are worth stating plainly:

• It is an endorsement. It has to be requested from the carrier and attached to the policy. Naming a client on a certificate does not create it, and a client’s contract reviewer will check.
• It usually names a specific client, which means a new client account can mean a new endorsement request rather than a reissued certificate.

The gap between those two facts and what a requester expects is the single most common source of friction in staffing certificates — which is its own subject, and worth reading if a client has ever bounced your paperwork.

The experience modifier compounds in this industry

Your experience modifier adjusts your premium up or down based on your own loss history against what would be expected for your class codes and payroll.

The thing staffing owners consistently miss is that frequency drives the mod more than severity does. A book of small, frequent claims moves the modifier harder than one large claim, and staffing operations — high headcount, high turnover, workers new to each site — generate exactly that pattern if nothing is done about it.

The controllable levers are unglamorous and they work: a real return-to-work program, and early claim closure. A claim left open for a year with no resolution is a claim still weighting your modifier. Both of these are within your control in a way that client-site conditions are not, which is why they are where the effort belongs.

Certificates, and how often you will need them

Staffing agencies need certificates constantly, per client, and often at short notice. This is where an agency relationship either works or wastes your time.

What makes a certificate request fast is entirely on the front end: the holder’s exact legal entity name, the coverages the contract requires, any endorsement wording specified, and where it needs to be sent. If an endorsement has to be requested from the carrier before the certificate can say what the contract requires, that step is the one that takes time — and knowing that in advance is the difference between a two-day wait that makes sense and a two-day wait that feels like the agency is asleep.

You can send a request straight to the desk here through our certificate of insurance request.

What changed for Texas rates in 2026

Texas loss costs were revised with effect from 1 July 2026, and the statewide average moved down.

A statewide average is not what a staffing class will necessarily see. Comp premium is driven by class code, payroll and claims history far more than by any filing, and hazardous classes can move against the statewide direction in the same year.

Where this sits in the rest of your program

Comp is not the whole picture for a staffing operation. Your general liability policy answers for injury and damage to third parties, which is a genuinely different exposure from injury to the workers you place, and clients frequently require both alongside a commercial umbrella at a specified limit.

If you want someone to read the insurance exhibit and tell you what your current program actually satisfies, that is ordinary work at a desk in Houston — and it is a better conversation to have before you sign than after a certificate gets refused.

Common questions

Do staffing agencies have to carry workers' compensation in Texas?

Not by statute — Texas leaves comp elective for most private employers. In practice the answer is almost always yes anyway, because client contracts require it. A staffing agency that declines coverage is choosing to compete only for clients who do not ask, and that is a very short list. Our article on the non-subscriber decision covers the underlying choice.

Which class code applies to a temp worker?

The code for the work actually performed at the client site, not the code that describes your agency. A clerical placement and an industrial placement are different codes carrying very different rates, and payroll has to be assigned accordingly. This is why a staffing agency's class code schedule is usually long — it reflects the work, not the business.

What is an alternate employer endorsement?

An endorsement to your workers' compensation policy that extends its protection to a named client as though that client were the employer, for injuries to the workers you place there. Clients frequently require it, and it has to be endorsed onto the policy by the carrier — naming the client on a certificate does not create it.

Why did my payroll audit bill increase?

Usually one of three things. Payroll was reclassified into a higher-rated code than it was estimated in. Overtime was handled differently than you assumed. Or subcontracted and 1099 labor was reclassified as your payroll because you could not produce certificates of insurance for it. All three are avoidable with records kept per placement rather than per client.

How fast can I get a certificate for a new client?

Send the request with the holder's exact legal name, the coverages required and any endorsement wording the contract specifies, and it goes straight to the desk that writes the policy. If an endorsement has to be requested from the carrier, that step takes longer than the certificate itself — which is the usual reason a certificate that looks simple is not instant.

Can Moon Insurance place high-hazard staffing payroll?

We can review the class codes, the loss history and the placement mix, and take that to the market. Whether a given carrier will write it depends on the specifics, and comp appetite turns on class code and claims history far more sharply than most lines do. An agency that tells you the answer before it has seen the account is guessing.

Sources: TDI — workers' compensation resources for employers; TDI — workers' compensation consumer guide; Texas Labor Code Chapter 406 — coverage elections and non-subscriber provisions. Verified 3 August 2026.

General information about Texas filing rules, not legal advice and not a quote. Requirements change; confirm your own through the Texas DPS License Eligibility system before acting. Published 3 August 2026.