{"id":31554,"date":"2024-05-31T10:45:19","date_gmt":"2024-05-31T14:45:19","guid":{"rendered":"https:\/\/gtm.com\/household\/?p=31554"},"modified":"2024-05-31T11:01:22","modified_gmt":"2024-05-31T15:01:22","slug":"workers-compensation-household-employers","status":"publish","type":"post","link":"https:\/\/gtm.com\/household\/workers-compensation-household-employers\/","title":{"rendered":"Why Workers\u2019 Compensation is Important for Household Employers"},"content":{"rendered":"
\"workers-compensation-household-employers\"

Obtaining workers’ compensation insurance may not be as obvious a \u201cto do\u201d for a family hiring a nanny or other household employee. However, a lack of coverage is a critical and costly mistake. Here\u2019s why having a workers\u2019 compensation policy is important for household employers.<\/p><\/div>\n

Preparing a nanny contract<\/a>. Setting up payroll and tax withholdings<\/a>. Making sure your nanny is ready to care for your children. These tasks are at the top of your family\u2019s list when you hire an in-home caregiver to look after your children. Getting worker\u2019s compensation insurance<\/a>? That may not be as obvious a \u201cto do\u201d but a lack of coverage can be a critical and costly mistake for families.<\/p>\n

Here\u2019s why workers\u2019 compensation insurance is important for household employers.<\/p>\n

What is workers\u2019 compensation insurance?<\/h2>\n

Let\u2019s start with an understanding of workers\u2019 compensation.<\/p>\n

This insurance coverage provides medical and wage benefits for employees \u2013 including household workers like nannies, senior caregivers, and housekeepers \u2013 who are hurt or become ill on the job.<\/p>\n

Workers\u2019 compensation can help cover your employee\u2019s medical bills and some of their lost wages. It also protects you, as the employer, from liability.<\/p>\n

Is workers\u2019 compensation required for household employers?<\/h2>\n

Coverage is typically required in most industries. However, worker\u2019s compensation insurance requirements for household employment vary by state<\/a> and may depend on the number of hours your employee works and how many workers you employ.<\/p>\n

In general, coverage is required for all<\/em> household employers in Alaska, California, Connecticut, Delaware, District of Columbia, Hawaii, Iowa, Kansas, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, Ohio, Oklahoma, and South Dakota.<\/p>\n

Workers\u2019 compensation is required only for families with full-time<\/em> household help in Colorado, Illinois, Kentucky, Michigan, New York, Utah, and Washington.<\/p>\n

State-by-State Workers\u2019 Compensation Requirements<\/a><\/p>\n

What if my state doesn\u2019t require workers\u2019 compensation insurance?<\/h2>\n

If obtaining a workers\u2019 compensation policy is not required in your state, voluntary coverage may still be a good idea. That way your nanny gets financial protection if they are hurt on the job. It can give both you and your employee peace of mind. In some states, a policy may only cost a few hundred dollars a year.<\/p>\n

Get a quote on workers’ compensation insurance<\/a><\/p>\n

Why isn\u2019t my employee covered by a homeowner\u2019s or renter\u2019s insurance policy?<\/h2>\n

In just about every state, workers\u2019 compensation needs to be separate from any homeowners’ or renter’s insurance policy.<\/p>\n

The exceptions are New Jersey and California. In New Jersey, you can add a rider for workers\u2019 compensation to your homeowner\u2019s policy which is substantially cheaper than a stand-alone policy. In California, it is required<\/em> to have workers\u2019 compensation on your homeowner’s policy if you have a household employee.<\/p>\n

Also, there is a difference between someone visiting your home slipping and falling or even a worker like a plumber or an electrician getting injured while working at your house and having someone employed<\/em> in your home.<\/p>\n

Never assume that your employee is covered under your homeowner\u2019s or renter\u2019s insurance.<\/p>\n

What\u2019s the difference between workers\u2019 compensation and disability insurance?<\/h2>\n

In five states (California, Hawaii, New Jersey, New York, and Rhode Island), household employers are required to make deductions from their employee\u2019s pay for disability insurance. These programs provide short-term benefits to employees who are unable to work due to a non-work-related<\/em> illness or injury. Workers\u2019 compensation provides benefits for work-related<\/em> illnesses and injuries.<\/p>\n

In some states and cities, your employee may also be eligible for paid medical and\/or family leave. Again, these programs are different from workers\u2019 compensation insurance.<\/p>\n

Why is workers\u2019 compensation important?<\/h2>\n

Besides coverage being the law in many states, here are four reasons why workers’ compensation is important in household employment.<\/p>\n

1. Your nanny is protected<\/h3>\n

A nanny can receive financial help with medical expenses and lost wages under workers\u2019 compensation if they are injured or get sick on the job. You never know when an injury might occur, whether it\u2019s around the house, playing with the kids in the park, or even walking the dog. Unforeseen risks are always in play.<\/p>\n

2. Your family is protected<\/h3>\n

If your employee is hurt on the job and you lack the required coverage, you are now open to a workers\u2019 compensation claim and a potential lawsuit to recover lost wages and medical expenses. Even without the threat of a claim or litigation, you may feel compelled to help your nanny financially and that could mean thousands of dollars out of your pocket.<\/p>\n

3. You avoid major fines and penalties<\/h3>\n

Non-compliance with your state\u2019s workers\u2019 comp 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.<\/p>\n

In New York State, for example<\/a>, you could face a fine of up to $2,000 for every 10 days of noncompliance. By the time you receive your first penalty notice, you could be on the hook for more than $12,000. Since workers’ compensation coverage needs to be in place on the first day of work for your employee, fines will start accumulating right away.<\/p>\n

Additionally, the fine for a criminal conviction can cost you up to $50,000.<\/p>\n

A workers\u2019 compensation claim may also result in paying for all wage and medical benefits awarded to your employee, and your legal representation is required to defend against a workers\u2019 compensation claim.<\/p>\n

4. You maintain a positive relationship with your nanny<\/h3>\n

With a workers\u2019 compensation policy in place, your nanny can feel assured that they will be compensated for their medical costs and lost wages. And you will maintain a good relationship with your employee. If you don\u2019t have coverage and they need to file a workers\u2019 compensation claim, that will most certainly put a strain on their employment if not end their time with your family. Now, on top of the financial hit your family will take, you need to find alternate childcare while you look for a new nanny.<\/p>\n

GTM can help<\/h2>\n

Along with nanny tax and payroll services, GTM Payroll, through the GTM Insurance Agency<\/a>, can help with workers’ compensation insurance for families with household help. With licensed insurance professionals on staff, we can obtain quotes, manage your policy, and take care of any audits. It truly is one call for all your payroll, tax, and insurance needs. To learn more, or if you have any questions, get a complimentary, no-obligation consultation with one of our household employment experts at (800) 929-9213<\/a> or schedule time with us at your convenience<\/a>.<\/p>\n

Download The Complete Guide to Household Payroll<\/h2>\n

Get our complimentary guide and learn everything you need to know about paying your employees legally and filing your taxes the right way.
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