The short answer is yes.
Many states require that an individual employing household staff carry workers compensation and/or disability insurance. Because the legal obligations vary widely from state to state, our discussion will focus specifically on the state of New York.
Workers compensation insurance provides several benefits: medical services to treat job-related injury or illness; temporary or permanent cash benefits to help offset income loss; death benefits for the employee’s survivors; and protection for the employer against most lawsuits from on-the-job injuries/illnesses.
Domestic workers such as health aides, au pairs, housekeepers and gardeners working with the same employer in a private household 40 hours or more per week are required to be covered by a workers compensation insurance policy paid for by their employer.
Although workers comp is not required for an employee working less than 40 hours per week, it is important to understand that time spent at the residence, including sleeping and eating, as well as any additional time spent off-premises performing other duties for the employer, counts toward the total hours worked per week.
People who employ household help less than 40 hours per week would be wise to protect both themselves and their employees with a workers comp policy.
For example: A parent employs an au pair to work four consecutive eight-hour days, and the au pair sleeps at the family’s home for the three evenings in between “shifts.” While the total work hours per week would ordinarilybe 32, according to state regulation, the au pair in this instance is employed well beyond the 40-hour mark, given the inclusion of overnight hours.
Should an employee bring a lawsuit against the employer as the result of an injury at work, the workers comp policy will provide coverage for defense costs and damages. Further, if an employee’s health insurer seeks reimbursement from the employer for coverage provided following a work-related injury, the policy is designed to respond.
Beyond the benefits afforded to both employer and employee, the New York State Workers’ Compensation Board has severe penalties in place for those failing to secure insurance where required. An employer would face a penaltyof $2,000 per 10-day period of noncompliance, in addition to the actual award (compensation and medical), plus any other penalties the board assessed for noncompliance.
Even though a homeowners insurance policy may automatically come with some very limited workers compensation coverage for “part-time” employees, the law states that this does not cover domestic employees for workers comp benefits.
As a result, people who employ household help for less than 40 hours per week would be wise to protect both themselves and their employees with a workers comp policy.
Disability insurance is an employee benefit that compensates employees for some lost earnings due to an injury or illness that is not work related. Similar to the requirements for workers compensation, New York’s Disabilit Benefits Law states that the employer must carry a disability policy if he or she employs one or more domestics in the home at least 40 hours a week (and if they work 30 or more days in a calendar year).
In contrast, whereas the workers comp must be paid in full by the employer, the disability policy may be paid for either entirely by the employer or jointly by the employer and employee.
Workers compensation insurance policies can be purchased through the State Insurance Fund or privately through a handful of personal insurance carriers now offering coverage options. Select companies like AIG’s Private Client Group, which typically cover all of their customers’ exposures, provide the advantage of an existing relationship with the insurance provider.
As always, our best advice is to seek the counsel of a professional insurance advisor in determining your responsibilities for providing workers compensation and disability benefits coverage.
This article was originally published in the August/September 2016 issue of Worth.