• About Us |
  • Follow Us: 
theinsurance411.com logo

The Insurance 411

What you need to know about insurance

  • Homeowners Insurance
  • Auto Insurance
  • Life & Health Insurance
    • All Life & Health Topics
    • Affordable Care Act (ACA)
    • Group Disability Insurance
    • HSAs
    • Life insurance
    • Long Term Care Insurance
  • Personal Insurance Basics
  • Specialized Personal Policies
    • All Specialized Personal Policy Topics
    • Boat Insurance
    • Motorcycle Insurance
    • Travel Insurance
    • Umbrella Insurance
  • Essential Property and Liability Insurance
    • All Property & Liability Topics
    • Business Income Insurance
    • General and Auto Liability
  • Specialized Insurance Policies
    • All Specialized Prop & Liability Topics
    • Credit Risk
    • Cyber Insurance
    • Directors & Officers
    • Employment Practices Liability
    • Environmental Liability
    • Professional Liability
    • Surety
    • The Basics
  • Workers’ Compensation Insurance
    • All Workers’ Comp Topics
    • Claims Management
    • Controlling Costs
    • Loss Prevention
    • Regulations
    • The WC Basics
  • Employee Benefits
    • All Employee Benefit Topics
    • Affordable Care Act – “ObamaCare”
    • Benefits Management & Compliance
    • COBRA
    • Dental Insurance
    • Group Disability Insurance
    • Retirement Plans
    • Vision Plans
    • Voluntary Benefits
Top Personal 411 Stories
  • | How to Protect Yourself from Social Media Liability
  • | End-of-Life Planning
  • | Life Insurance 101: What Happens When a Policy Matures?
  • | Term Life Insurance: A Bargain-Hunter’s Dream?
  • | Ten Reasons to Buy Long-Term Care Insurance Now

Do You Need Workers Compensation for Household Contractors?

September 6, 2014 by Leave a Comment

Every day, an estimated 2.5 million individuals—mostly women—work in others’ homes, cleaning, cooking and caring for children and the elderly. Although many people treat them as independent contractors, the IRS and workers’ compensation laws may consider these domestic workers “household employees.” If they are injured while working for you, you may be liable for lost-time claims as well as medical payments.

Domestic Workers Comp

Some states require workers comp even for part-time domestic workers.

Household employees include the following workers:

  • Babysitters
  • Caretakers
  • Cleaning people
  • Domestic workers
  • Drivers
  • Health aides
  • Housekeepers
  • Maids
  • Nannies
  • Private nurses
  • Yard workers

The IRS considers these people “household employees” if you can control not only what work is done, but how it is done. It does not matter whether the work is full-time or part-time or that you hired the worker through an agency or from a list provided by an agency or association. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.

If only the worker can control how the work is done, the worker is not your employee but is self-employed. A self-employed worker usually provides his/her own tools and offers services to the general public in an independent business.

Coverage Requirements Vary by State

Although IRS regulations govern tax withholding requirements throughout the U.S., workers’ compensation requirements vary by state. Some states require employers of domestic workers to provide workers’ compensation, which provides payments to employees for injuries that occur on the job. In addition to covering an injured worker’s medical payments, it will also provide “lost time” benefits when a worker cannot work and collect a paycheck because of a work-related injury or illness.

The following states require workers’ compensation coverage for full- and part-time domestic help: Connecticut, Delaware, Hawaii, Iowa, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, Ohio, Oklahoma*, Puerto Rico, South Carolina*, South Dakota* and the District of Columbia. These states require coverage for full-time workers only: Alaska, California, Colorado, DC, Illinois, Kentucky*, Michigan, New York, North Carolina*, Utah and Washington*. Kansas requires coverage on any domestic worker if the employer’s total payroll for the preceding calendar exceeds $20,000 for all workers.

Does Homeowners Insurance Cover Domestic Workers?

Standard homeowners policies include medical payments coverage, which will pay the medical bills of someone injured on your property, regardless of negligence on the part of the homeowner. However, the policy will not pay if you are obligated to provide workers’ compensation.

Even if you are not obligated to provide workers’ compensation, the medical payments coverage under a homeowners policy has some serious limitations if you have in-home help. First, most homeowners policies limit medical payments coverage to $1,000 or $5,000. Workers’ compensation has no such limits. Second, you have a deductible. Third, without workers’ compensation, an injured worker can sue you for expenses that exceed the coverage, including lost wages and pain and suffering. By accepting workers’ compensation insurance payments, an injured employee accepts workers’ compensation as the “exclusive remedy” for his/her injury and (generally) loses the right to file a lawsuit.

Workers’ compensation policies also provide some “employers liability” coverage, which covers you if one of your injured worker’s family members sues you for loss of consortium, loss of services provided, or the like. (Although the policy provides some coverage, it might not be enough to protect you from a large lawsuit. You may want to consider a personal umbrella liability policy, which offers higher limits that will “kick in” once your workers’ compensation policy pays its employers liability limits.)

In conclusion, if you hire in-home domestic help, you should seriously consider purchasing workers compensation for household employees, if available in your jurisdiction, unless your domestic help truly fit the definition of independent contractors or are paid by an agency.


 

* Kentucky requires coverage if the employer has two or more domestic employees working 40 or more hours per week; Oklahoma requires coverage for all domestic workers if the employer had a gross annual payroll of $10,000 or more in the preceding calendar year for such workers; North Carolina requires coverage for any employer with more than 10 full-time nonseasonal laborers; South Carolina requires coverage if the employer has four or more domestic workers and a total annual payroll during the previous calendar year of less than $3,000. In South Dakota, any domestic worker employed more than 20 hours in a calendar week and more than six weeks in any 13-week period needs coverage; Washington’s requirement applies to employers with two or more domestic workers.

Filed Under: Homeowners Insurance Information   •  Personal Insurance Basics   •  Personal Lines   •  Recommended Articles

[wp_ad_camp_3]

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Read more ⤵

  • Business Insurance
  • Personal Insurance
  • Newest Personal Articles
  • All Personal Topics
  • Recommended Articles
    • Despite Its Low Cost, Most Consumers Don’t Buy Cyber Risk Insurance
    • Quick Guide to Renters Insurance
    • Not Your Granddad’s Life Insurance Policy
    • Car Insurance Policy Basics

Most Popular

  • Obesity and Life Insurance: Extra Pounds May Cost You More
  • 4 Ways To Use Life Insurance for Charitable Giving
  • Critical Illness Insurance Insures More than Just Your Health!
  • How To Protect Yourself from Dog Bite Liability Claims

Attention Insurance Agents

If you are looking for quality insurance content for your own customized newsletter, please visit Smarts Publishing:
https://smartspublishing.com

Business Insurance 411

  • Essential Property and Liability
  • Specialized Policies
  • Workers’ Compensation
  • Employee Benefits

Personal Insurance 411

  • Homeowners Insurance
  • Auto Insurance
  • Life & Health Insurance
  • Personal Insurance Basics

Read More

  • Business 411 Articles
  • Personal 411 Articles
  • Top Stories Business
  • Top Stories Personal

The Daily Blog

  • Newest Business Articles
  • Newest Personal Articles
  • Most Popular Business
  • Most Popular Personal

Copyright ©2019 TheInsurance411.com

  • Home
  • Terms of Use
  • Privacy Policy
  • About Us
  • Contact Us