B. Grady Greer
By B. Grady Greer, CIC, CISR
In California and elsewhere across the country, it is common practice to hire outside help to assist with household duties. Whether it is a nanny, housekeeper, gardener, chauffeur, chef, pool cleaner, or other residence employee, there are risks involved with hiring outside help that need to be addressed with your insurance agent. For purposes of this blog, we will focus on the California Workers’ Compensation laws, as the laws vary by state.
Who is considered a residence employee?
Many types of household services could fall into this category. The insurance industry definition of a residence employee is: Any person employed by you whose duties are related to the ownership, maintenance or use of the dwelling, including the performance of household or domestic services; or who performs duties elsewhere on your behalf of a similar nature (for example: at a secondary residence) and whose duties are personal and not related to your trade, business, profession or occupation.
How do you obtain insurance for residence employees?
One of the first places a California resident can look to is their homeowners (or condo or renters) policy. All California personal property insurance policies are required to include automatic coverage for “occasional” employees. However, if your employee is considered “full-time” as defined by the insurance company, then you must specifically add Workers’ Compensation coverage to your policy for an additional premium. Failure to do so may leave you at risk of being personally liable for all injuries the employee sustains while in the course and scope of their employment with you.
How do I know if my residence employee is considered occasional or full time?
Depending on the number of hours the employee is working at your residence and whether they are working inside or outside your home, these workers may fall outside of the “occasional” definition and be considered a “full time” residence employee. In this case, it is best to discuss your individual situation with your insurance agent, as you may need to add Workers’ Compensation coverage to your homeowner’s policy, or purchase coverage through an alternative market.
In California, the typical definition that insurance carriers use to describe a “full-time” employee is:
- An Inside employee (nanny, housekeeper, etc.) working over 20 hours per week.
- An Outside employee (gardener, pool cleaner, etc.) working over 10 hours per week.
- Note: Under 10 hours per week is typically considered an “occasional” employee.
The California Worker’s Compensation law also states that in order for coverage to apply to your residence employee, the following terms and conditions must be met:
- Within the (90) days immediately prior to the date of injury, the employee must have been engaged in employment by you for no less than 52 hours, and must have earned no less than $100 in wages.
If the above terms are met, then your employee is subject to coverage under the Workers’ Compensation coverage afforded by your California personal insurance policy. The coverage would apply if the injury occurred in the United States of America, its territories and possessions, Canada, as well as anywhere in the world if they are working there temporarily to perform personal domestic duties on your behalf.
Who is not eligible for this coverage?
Due to the above terms and conditions imposed by the state, coverage typically does not apply to independent contractors or temporary employees employed at your residence for only a few hours – i.e. painters, handymen, etc. – therefore, it is important that you discuss the hiring of these types of individuals with your insurance agent prior to inviting them to perform work at your residence.
What else can I do to protect myself?
Maintain an employee personnel file and document, document, document. We recommend keeping a log of dates and times the employee(s) worked, as well as paying them via check or some other traceable method, versus cash, in the case of a Workers’ Compensation claim. Again, always discuss your situation with your agent so they can provide comprehensive risk management consultation.
The most important determination to make is whether your employee falls under the “occasional” or “full-time” residence employee definition. It’s better to make certain you have the correct coverage in place before a claim occurs, so that you are not left paying the costs of an injury, or even worse, a lawsuit, out-of-pocket. As always, it is best to discuss your individual situation with your insurance agent so you can be properly advised on how to cover your specific California Workers’ Compensation risks.
Disclaimer: The above content is a general overview which is provided for discussion purposes only and is not in any way meant as providing recommendations or legal counsel. It is not intended to apply to each circumstance. Because the facts and circumstances of every matter differ and the terms, conditions, exclusions and limitations contained in insurance policies vary, you should review your policy carefully and seek any legal counsel that may be necessary or appropriate. Momentous is not responsible for any losses or damage resulting from reliance on the information contained herein.
If you would like to further discuss the issues raised here, you may contact Grady Greer by email at firstname.lastname@example.org.