Workers’ Compensation Insurance for Household Employers

What is Workers’ Compensation Insurance?

Workers’ compensation insurance provides medical and wage benefits for employees who are hurt or become ill on the job. It can cover an employee’s medical bills and a portion of their lost wages. It also protects you, as an employer, from liability. Workers’ compensation coverage is typically required in most industries. However, requirements for household employers vary by state and may depend on the number of hours your employee works and how many workers you employ.

Workers’ compensation insurance is different from disability insurance. In five states (California, Hawaii, New Jersey, New York, and Rhode Island), household employers are required to make payroll deductions for disability insurance. These employer-paid programs provide short-term benefits to employees who are unable to work due to a non-work related illness or injury.

In some states and cities, your employee may also be eligible for paid medical leave. Again, these programs are different from workers’ compensation insurance.

Workers’ Compensation Requirements for Household Employers

The laws around workers’ compensation are different for each state. Review specific workers’ compensation requirements by state.

In general:

States and districts requiring workers’ compensation for all household employees States requiring workers’ compensation for full-time household employees only
  • Alaska
  • California
  • Connecticut
  • Delaware
  • Hawaii
  • Iowa
  • Kansas
  • Maryland
  • Massachusetts
  • Minnesota
  • New Hampshire
  • New Jersey
  • Ohio
  • Oklahoma
  • South Dakota
  • Washington, D.C.
  • Colorado
  • Illinois
  • Kentucky
  • Michigan
  • New York
  • Utah
  • Washington

Even in states where a policy isn’t required, voluntary coverage may be a good idea. It gives your you and your employee peace of mind in the event of an accident or illness. Your employee gets immediate financial support to help with medical bills and lost pay while you’re protected financially. In some states, a policy may only cost a few hundred dollars a year.

Penalties for Non-Compliance

Non-compliance with your state’s workers’ compensation requirements can be one of the biggest financial mistakes you can make as a household employer. A single work-related accident could leave you liable for tens of thousands of dollars in medical bills, lost wages, and state fines. In New York State, for example, you could face a fine of up to $2,000 per every 10-day period of noncompliance. Additionally, the fine for a criminal conviction is from $1,000 to $50,000.

Getting caught is easier than you may think. All it takes is for your employee to get hurt while working. They go to the hospital and say the injury happens at work and open a workers’ comp claim. It’ll be discovered that you don’t have the required coverage. You’ll get fined for lacing a policy and could be on the hook for at least a portion of your employee’s lost wages and medical costs. On top of that, you’ll need to pay for temporary care for your child or elderly loved one or, perhaps, go through the hiring process for a new caregiver.

Never assume that your employee’s work-related injury or illness is covered under your homeowner’s insurance policy. Only in a couple of states (California and New Jersey) can you add workers’ compensation coverage to your homeowner’s policy.

Video Guide to Workers’ Compensation for Household Employers

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