National Insurance Awareness Day is designated as a time to review your various policies and make sure you have adequate coverage. Household employers should check their compliance with workers’ compensation laws and other required insurance policies.
We’ll start with workers’ compensation as coverage is required by law for many families that employ a domestic worker like a nanny or in-home senior caregiver. Not having the proper coverage can lead to thousands of dollars in fines and penalties and possible lawsuits.
1. What is workers’ compensation?
Workers’ compensation insurance is a policy that protects both you as the household employer and your employee in the case of a work-related injury or illness. It helps cover your employee’s medical bills and a portion of their lost wages while protecting you from liability. Workers comp could be required in your state depending on the number of hours your employee works in a week.
2. What happens if I don’t have required coverage?
A single work-related accident could leave you, as the employer, liable for tens of thousands of dollars in medical bills, lost wages and state fines. It can also expose you to a lawsuit from your employee.
In states where workers’ compensation is required, employers can be fined for not carrying a policy. 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.
3. How can I get caught not having the required coverage?
It’s easier than you think. Let’s say your nanny gets hurt while working at your home. She goes to the hospital and says she was injured on the job. That opens a workers’ comp claim and it’ll be quickly discovered that you don’t have a policy. You’ll be liable for at least a portion of your employee’s lost wages and medical costs. That’s on top of fines and penalties for lacking proper coverage.
4. Will my homeowner’s insurance cover job-related injuries?
Never assume that your employee’s work-related injury or illness is covered under your homeowner’s insurance policy. Check with your insurance agent.
5. What if workers’ compensation is not mandatory in my state?
Even if you live in a state where coverage is not required, having workers’ compensation insurance is a smart idea, giving 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 wages and you’re protected financially.
6. What about disability insurance?
Five states (California, Hawaii, New Jersey, New York, and Rhode Island) require domestic employers to make payroll deductions for disability insurance. These employee-paid programs provide short-term benefits to employees who are unable to work due to a non-work related illness or injury.
7. I’m in New York State, do I need to offer Paid Family Leave?
New York State employers — including families that employ domestic workers — are required to provide paid family leave to their full-time employees. The program is funded by employees through an additional payroll deduction and paid to your disability insurance carrier (who will also be your carrier for PFL). Here’s everything you need to know about New York’s Paid Family Leave Program.
8. How can GTM help?
GTM Payroll Services is the only household payroll service provider that is also a licensed insurance brokerage. On National Insurance Awareness Day or any day, you can easily add a policy to your household payroll and tax plan through GTM. We’ll set up your coverage and handle all audits, invoices, premiums, and compliance notices. We make it that easy. Or you can purchase coverage separately. Either way, we’ll shop for competitive rates on your behalf. Call (800) 929-9213 to learn more or request a quote for workers’ compensation.
We can also handle deductions for Paid Family Leave and disability insurance. Call (800) 929-9213 for a free, no-obligation consultation with a household employment expert to see how we remove the risks, hassles, and worries from nanny taxes and payroll.