Household Employment

Do you need workers’ compensation insurance for household employees?

Think you can get away without workers’ comp insurance for your household staff? Don’t let an accident turn into a nightmare for you and your employees.

By Lauren Orcutt

Workers’ compensation insurance protects your employee’s physical health and your financial health, so it’s tremendously important to have a policy for your household. If your employee gets hurt or falls sick, workers’ comp will cover their medical bills and lost wages. If you don’t have an insurance policy, you could face serious risks. 

In many states, workers’ compensation law requires you to have workers’ compensation insurance for your household employees. Fortunately, workers’ comp works in your favor.

Why you should get workers’ comp insurance

If your housekeeper is dusting a fan and falls off a ladder, her medical bills for a concussion are covered by your insurance.

If your chauffeur dodges to avoid a deer and breaks his right leg, his wages are covered until he recovers. With workers’ compensation insurance coverage, you don’t have to pay out of pocket for his unexpected medical expenses, and you can hire a temporary chauffeur without paying double salaries.

And if your toddler gives your nanny COVID-19, you’re not responsible for paying her wages while she faces a potentially long illness and recuperation (on top of paying for babysitters to cover your childcare while she’s out).

Risks of not having workers’ comp — and benefits of having it

When someone works in your home, you face increased liability, financially and legally. If your household employee is injured or becomes sick, you’re personally responsible for covering all their related medical costs and for paying their regular wages while they are not working. 

In some states, there’s no end to that liability. If they can never work again, you’ll pay their lost wages for the rest of their life.

Medical costs can be astronomical, and if you need to hire an independent contractor as a backup or a temporary worker to cover for your injured employee, you will have to pay two salaries — unless you have worker’s comp insurance.

In states where workers’ compensation insurance is required, you could also pay serious fines if your lack of coverage is discovered.

You could also be sued by your employee. If they catch an illness at your home or suffer a work-related injury, you could be found legally responsible, even if there was no negligence. But if the worker accepts workers’ compensation benefits, in most states, they waive their right to sue (even if it was your fault).

A workers’ comp policy usually costs around $600 to $800 a year. Lawsuits, on the other hand, could reach millions in penalties.

Are you required to get workers’ compensation insurance?

Most states require employers to purchase workers’ comp policies, but domestic employees are often exempted. Some states have a minimum threshold for hours worked or wages paid for household workers, and others have a minimum number of employees per household, or some combination of the two.

In Virginia, for example, you aren’t required to buy worker’s comp. In Colorado, you only need to buy it if your domestic employee works full time. In Kentucky, you need coverage if you have two or more full-time employees. In Hawaii, you need to purchase insurance if your employee makes more than $225 per calendar quarter (which is not very much).

It’s important to check your state’s specific laws governing household employees and workers’ compensation requirements.

But whether or not you’re required to cover your domestic workers, talking to your insurance company about workers’ comp is well worth it for you and your employees in the long run.

How it works

You can only get a workers’ compensation policy from a state-licensed insurance broker. It’s an annual premium for a year of coverage.

The cost of workers’ compensation insurance for household employees depends on the state you live in. It’s usually calculated by how many employees you have, but in some states, it’s calculated based on wages. On average, it costs around $600 to $800 a year (well worth the price).

One worker’s comp policy provides coverage for your whole household — you don’t need a separate policy for each employee, and if you change employees, the coverage is continuous.

In 49 states, homeowner’s insurance is designed to cover contractors, like a plumber or a pool service tech, but not household employees. You’ll need to purchase a specific workers’ comp policy. In California, workers’ comp insurance for household employees may be included in your homeowner’s insurance policy. However, you may also need to purchase additional coverage. Check your state’s guidelines in this list from the Department of Labor.

Get workers’ comp insurance today

If you don’t currently have a comprehensive workers’ compensation insurance policy that covers your domestic employees, consider purchasing one as soon as possible. Accidents happen, and illnesses can be highly contagious. Covering your employee’s medical bills and lost wages related to a workplace injury can have a formidable negative effect on your income, both short term and long term.

For peace of mind, and to make sure you can afford to take good care of your private service professional, workers’ comp insurance is a crucial part of being a smart and ethical household employer.

Want to learn more about becoming an ethical household employer? Start a conversation with Nines payroll services today.

Related articles

Household Employment

Household employee taxes: what happens if you don’t pay?

Household Employment

Is a private service professional a contractor or an employee?