Do I need Workers’ Compensation insurance for domestic employees?

workers compensation for domestic employees

Nurse Workers Compensation Insurance 2Like many states, New York requires most employers to carry Workers’ Compensation coverage for employees. New York State’s requirements for Workers’ Compensation coverage can seem confusing but once you understand the guidelines for required coverage, you’ll know if you need an additional policy to be compliant.

Many households that have domestic employees choose to carry Workers’ Compensation coverage even when not required in their specific situation because the coverage reduces the risk for work-injury related lawsuits.

There are special rules for domestic employees in New York State. The requirements for coverage hinge on who pays the domestic employee and on how many hours the employee works for you or is at your residence.

What is a domestic employee?

Here are some types of household workers New York State considers to be domestic employees:

  • Maids
  • Cooks
  • Housekeepers
  • Nannies or au pairs
  • Laundry workers
  • Butlers
  • Gardeners
  • Chauffeurs
  • Nurses
  • Babysitters
  • Home health aides
  • Companions

If you have any of these types of domestic employees working at your household, you may be required to carry Workers’ Compensation coverage.

However, if the domestic employees are paid by an outside agency, either private or government, it’s the responsibility of the agency who employs the domestic employee to provide Workers’ Compensation coverage. When hiring domestic employees through an agency, ask to see the details of the agency’s insurance coverage, including liability coverage and Workers’ Compensation coverage.

Work done by repairmen or home contractors can sometimes last for days or weeks, making it seem like they live at your home, but repairmen or short-term home contractors aren’t considered to be domestic employees. These employees or contractors are providing services on behalf of their employer or their own business. In these cases, you are not the employer and don’t need to purchase Workers’ Compensation coverage. When hiring contractors, repairmen, or other similar service providers, it’s always prudent to ask for proof of insurance coverage, including Workers’ Compensation coverage and liability coverage.

When do I need Workers’ Compensation coverage?

In New York State, you’ll need Workers’ Compensation coverage if any of your domestic employees works 40 hours or more per week or if they live at your home. This isn’t a combined total, so if you have two domestic employees that each work 30 hours per week for a combined total of 60 hours per week, you aren’t required to purchase Workers’ Compensation coverage if none of the employees live at your home.

One important rule to be aware of is that the state counts time spent on premises as work hours even if the time is unpaid. If you have a domestic employee who works 30 hours per week but who is at your home several additional unpaid hours each week, putting the employee at or over 40 hours, New York State requires Workers’ Compensation coverage for that employee.

New York State Workers’ Compensation requirements at a glance

You’re required to purchase Workers’ Compensation coverage for your domestic employees if the employee is paid by you as opposed to an agency and if any of the below apply:

  • the employee works 40 hours per week or more
  • the employee lives at your home
  • the employee spends a combined total of 40 hours or more at your home – even if some hours are unpaid

What does Workers’ Compensation cover?

Workers’ Compensation coverage is a type of no-fault insurance designed specifically to protect workers when injured on the job. Workplace injuries can be expensive, leading not just to medical expenses, but also ongoing expenses such as lost wages and rehabilitation costs. In some cases, workplace injuries can lead to a permanent disability as well.

As a benefit to employers, workers who are covered by Workers’ Compensation usually cannot sue the employer for additional damages. However, spouses or other family members of the employee may still be able to sue for various losses related to the work injury.

Workers’ Compensation Coverages

  • Lost wages: Injured workers can qualify for up to 2/3 of their lost wages due to the injury.
  • Medical costs: Expenses related to treating work injuries are covered subject to state guidelines.
  • Rehabilitation: New York State provides rehabilitation services as part of Workers’ Compensation coverage, including medical rehabilitation, vocational rehabilitation, selective placement, and social services.
  • Death benefit: Spouses or dependents may be entitled to a cash benefit of up to 2/3 of a worker’s weekly pay if a worker is fatally injured by a covered work injury. If there are no dependents, a sum of $50,000 and a smaller funeral expense benefit may also be available for parents or the estate of a deceased worker.

Can I cover domestic employees with my business policy?

Much like your homeowners insurance policy differentiates between personal risks and business-related risks – and usually doesn’t cover the latter, New York State differentiates between Workers’ Compensation coverage for any businesses you may have and Workers’ Compensation coverage for your domestic employees. Even if you have a Workers’ Compensation policy for a business, the state sees your business as a separate legal entity and your domestic workers are not employed by your business. They’re employed by your household.

Can I use my homeowners insurance policy?

Your homeowners insurance policy probably has a Workers’ Compensation coverage endorsement which duplicates some coverage provided by a standalone Workers’ Compensation insurance policy. However, there are some limits to the Workers’ Compensation coverage provided by your homeowners insurance policy. Specifically, if the worker should be covered by a separate Workers’ Compensation policy, your homeowners insurance coverage won’t apply for Workers’ Compensation related claims.

For example, if you have a live-in nanny who only provides service a few days a week totaling less than 40 hours, you would still be required to purchase a separate Workers’ Compensation policy. In this case, where a separate policy is required, your homeowners insurance policy will not provide coverage. Because New York’s Workers’ Compensation coverage requirements examine the amount of time spent at your household, it can be very easy to negate your homeowners insurance coverage for Workers’ Compensation through overnight stays or extra time spent at your household by employees. A nanny or au pair who stays at your home for 48 hours over a weekend – even if some of the time is unpaid – is considered an employee who works over 40 hours.

New York State Workers’ Compensation penalties

Like most states, New York State is strict about compliance with Workers’ Compensation laws and penalties for not purchasing Workers’ Compensation coverage when required can be stiff. If a domestic employee is injured on the job and is not covered by Workers’ Compensation coverage when coverage is required, you can be liable for medical costs and lost wages, including any continuing disability and rehabilitation expenses. The state also assesses a fine of $2000 for every 10-day period of noncompliance. If New York State determines that you’ve been noncompliant for an extended duration, the cost of fines can add up quickly in addition to any legal liability you have for medical payments, lost wages, etc.

When compared to the potential costs of not having required coverage, Workers’ Compensation coverage is an affordable choice. Rates are based on risk and claims history, helping to keep costs down for insuring lower-risk workers like most domestic employees.

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