One of the most often overlooked requirements for household employers may also be the costliest if you’re caught without it. By employing a nanny in your home, you may be required to carry workers’ compensation insurance.
Here’s what parents need to know about workers’ compensation insurance.
What does workers’ compensation cover?
If your nanny gets hurt or becomes ill while working, part of their medical bills, rehabilitation costs, and lost wages may be covered by your workers’ comp policy. You may also be protected from a civil suit if your nanny wants to sue over the injury or illness.
Do I need workers’ compensation?
Required coverage depends on your state. Twenty-four states require household employers to carry workers’ comp insurance for either full- and part-time nannies or full-time only nannies. Find your state’s workers’ compensation requirements.
Keep in mind that if your nanny meets the hourly threshold for coverage for just one week, you may need a policy that covers the entire year. For example, you have a part-time nanny during the school year and their weekly hours fall below the workers’ comp requirement in your state. However, during the summer, your nanny puts in a 40-hour work week. That could trigger a requirement to have a workers’ comp policy.
What happens if I don’t have required coverage?
Without the required coverage, you could face significant fines and penalties and may be held liable for your nanny’s medical costs related to the injury. On top of all that, you’ll need to pay for backup or temporary care if your nanny misses time at work.
Penalties can be steep. In New York, for example, you can be fined up to $5,000 for not securing coverage. Any type of misrepresentation – such as paying your nanny under the table or misclassifying your nanny as an independent contractor – can result in a fine of $2,000 for every 10-day period of non-compliance.
Can I get voluntary coverage?
Yes! It’s a good idea to consider voluntary coverage if you’re not required to have a policy in your state. It will give you and your nanny peace of mind knowing that part of their medical costs and lost wages will be covered by workers’ compensation if they get hurt or sick on the job. You won’t have to worry about possibly covering those costs and your nanny won’t stress about paying their bills.
Won’t my homeowner’s insurance cover injuries?
In most states, no. Your homeowner’s insurance will not cover injuries or illnesses suffered by household employees while working for you. Only in California and New Jersey can you add workers’ compensation for a nanny to your homeowner’s insurance policy.
How much does a workers’ compensation policy cost?
Costs vary by state and can be as low as a few hundred dollars a year. Regardless of the costs, the risk of non-compliance is not worth the relatively small price to pay for a policy. Fines can easily reach into the thousands and you could face a lawsuit from your employee.
How do I get a workers’ compensation policy?
Sittercity has partnered with GTM Payroll Services to provide payroll, tax, and insurance services for their families. GTM is a licensed insurance broker and will manage the administrative tasks of policy like obtaining quotes, handling audits and invoices, and more. You can request a workers’ compensation quote online or call (800) 929-9213 ext. 7213. Coverage can be added to a payroll and tax service or purchased separately.