A recent article in the New York Times “When Having a Nanny Cam Isn’t Enough” points out that individuals need to protect themselves from lawsuits involving household help.

In an increasing litigious society, everyone who hires someone directly, rather than using a gardening company, for example, where employees would be considered independent contractors, needs to have insurance that protects them from costly lawsuits.

The article points out that simply having an umbrella or excess liability policies are not enough. While these policies may cover injuries such as a fall, they often don’t cover liability for employment practices.

Thinking that your nanny is “just like family” is a mistake. That same nanny could sue you for underpayment of wages, harassment, discrimination or retaliation for something as simple as asking for time off for a dentist’s appointment.

Wealthy clients are a target for this type of lawsuit. Many rather pay an out-of-court settlement rather than having the case go public and wind up in a local newspaper.

At Advocate, we advise our clients with domestic help to have an “Employment Practices Liability” policy as an optional endorsement on an umbrella policy to cover all the risks they face if something happens to the employer-employee relationship and an enterprising attorney sees it as grounds for a successful lawsuit.

This coverage can range between $600 to $1,000 year for up to $500,000 worth of coverage plus legal costs, In addition to additional insurance; clients should also protect themselves by taking a few simple steps when hiring domestic help. These include:
[list style=’mark’]
[list_item]Extensive background checks for criminal record and financial problems.[/list_item]
[list_item]Interview all references and then requesting others to make certain that everyone is in agreement regarding the candidate’s employment history.[/list_item]
[list_item]After hiring domestic help, have them fill out time sheets and adhere to set schedules.[/list_item]
[list_item]Request that they sign a confidentiality agreement. This will not only help if there is a lawsuit, it also protects against having your family’s photos or vacation plans posted on social media.[/list_item]
[list_item]Have a dedicated credit card for any household employee and require receipts to back up expenses.[/list_item]
[/list]
[list_item]Despite the paperwork involved, make all withholdings on household employee including state unemployment compensation. A former employee can file for unemployment, which would put the client liable to cover the costs of those benefits.[/list_item]
[/list]
The bottom line is not to put yourself at risk if you have domestic help. Even if you hire someone from a respected agency, do your own background check on credit ratings and call all the references.

Some people take more time researching a new car than they do with an individual who will care for their children. We at Advocate are here to help with any questions regarding what your present policies do and do not cover when it comes to domestic help.