People you employ to work in your home are called domestic employees. These employees can range from gardeners to maids to nannies to chefs (and many more). It’s important to keep in mind that hiring someone to work in your house makes your house a place of business. There are several important legal and insurance considerations to keep in mind to make sure that everyone involved stays safe and protected.
One important type of coverage to pay attention to when you hire employees to work in your home is worker’s compensation, which covers both the employee and employer in case the employee is injured on the job. Worker’s compensation covers medical bills and lost wages if someone is unable to keep working due to an injury sustained while at work. In return, the injured employee relinquishes the right to sue his employer for the injury.
Having worker’s compensation insurance for full-time domestic workers (those who work more than 26 hours per week) is not a choice in most U.S. states–it is mandated by law. Nearly every state requires that an employer purchase a worker’s compensation policy for full-time employees to protect both them and the employer while they’re on the job. Also, nearly every state and insurance company recommends purchasing a worker’s compensation policy, even if your employee is only part-time, since it can save both parties a huge amount of money should an accident happen. Some states have other standards for requiring worker’s compensation. For example, in California, employers must purchase a worker’s compensation policy if they hire anyone who cares for children or who earns (or has earned) more than $100 working at a single household.
The worst mistake that many people who hire domestic employees make is assuming that any injury that happens in their home would be covered by the liability portion of their home insurance policy. In reality, your homeowner’s insurance can’t cover any person legally once he or she has officially been deemed an “employee.” The only exception to this is if workers are considered independent contractors and carry their own insurance.