The International Nanny Association’s 30th Annual Conference is currently underway in Cancun, Mexico, and one of the workshops being held tackles the importance of workers’ compensation insurance for household employers. This is an issue that more and more employers are finding they need to address, either because their state requires they provide it for their nanny, or because they are worried about the consequences of not having a workers’ comp policy in place should their nanny get injured on the job.
Note: In New York, all household employers are required to provide both workers’ compensation and disability insurance for any nanny or other employee that works at least 40 hours in any week (so even if your nanny usually only works 30 hours a week, if she were to work 40 hours in one week at any time, you would need to have a policy in place).
To help illustrate the importance of having workers’ compensation insurance – even if you only have a part-time nanny – please see the following example of how not having insurance can impact a household employer and their employee.
The Smith family decided they needed to hire a full-time nanny, Jenny, to provide child care for their one-year-old son. Both parties agreed that the nanny would be paid “off the books” to avoid paying any taxes. Two weeks into her employment, Jenny was working in the Smith’s home and bent over to pick up the baby boy. Upon lifting him up, Jenny felt intense pain in her back, and after the family returned home, Jenny informed them she needed to go to the hospital as her back was causing her great suffering.
At the emergency room, the intake desk worker asked Jenny where the injury had occurred, and she informed them it was while she was at work in the Smith’s home. At this point, her injury is now considered a workers’ compensation case and she will fill out the appropriate paperwork. The doctor informs Jenny that she will need to be on bed rest for the next two weeks, and will then require three weeks of physical therapy to heal her injury.
The Smiths now face a problem – their employee will be out of work for at least 2-3 weeks, with possibly limited availability during her physical therapy treatments. This means they will have to hire a temporary replacement for Jenny. Jenny expects that the Smiths will compensate her for the hours she will miss while recovering and will cover her medical bills as she doesn’t have health insurance. The Smiths do not want the added expense of paying for Jenny’s bills and her lost wages on top of paying a replacement nanny. But the Smiths also fear Jenny will sue them if they do not compensate her.
The Smith family is now at risk of:
1) being exposed as paying their employee illegally (“off the books”) if there is a lawsuit
2) being exposed as paying their employee illegally if Jenny has her own health insurance
3) being sued for medical bill payments and compensation for lost wages
4) facing even further penalties because they live in New York, where workers’ compensation insurance is required