Case Study: Workers’ Compensation and Disability Insurance

Household employers should never assume that workers’ compensation and disability insurance liability is covered under their Homeowner’s Insurance Policy. A single work-related accident could leave you, as the employer, liable for thousands of dollars in medical bills and feeling obligated to pay for lost wages. Workers’ Compensation will cover necessary medical bills and a portion of your employee’s wages should he/she become injured or ill as a result of duties. Please see the case study below for an example of how working with a company like GTM can be beneficial regarding this issue.

The Situation

According to New York State law, any employer with employees working more than 40 hours per work week must provide workers’ compensation and disability coverage. A household employer that recently became a client of GTM had not been informed by her former payroll provider that she needed to provide both workers’ compensation and disability insurance for her employee. She faced a fine of $6,500 from the New York Workers’ Compensation Board for being without coverage.

GTM’s Solution

By working directly with the New York Workers’ Compensation Board, GTM’s payroll and tax experts immediately reduced the compliance penalty she faced. In addition, GTM worked with the household employer to obtain the correct insurance coverage necessary for her. Since many household employers don’t readily understand the difference between workers compensation and disability insurance, GTM educated the household employer on how workers’ compensation coverage applies (when a worker is injured on the worksite or in performing specified tasks by the employer) vs. disability (when an employee is ill or injured off the job and cannot perform her/his duties, including pregnancy).

Even in states where workers’ compensation is not required, GTM recommends obtaining coverage, as a single work-related accident could leave an employer liable for thousands of dollars in medical bills and feeling obligated to pay for lost wages.

The Results

GTM worked with the Workers’ Compensation Board to significantly decrease the penalties. The household employer’s disability penalty was totally eradicated ($0) and her workers’ compensation compliance penalty was reduced to $1,000—a 100 percent reduction for disability and a $5,500 reduction for workers’ compensation!

For more information, contact GTM’s Household Employment Experts at (888) 432-7972.