Workers’ Compensation 101 for Household Employers in New York

Jun 3, 2022 | Employing a Nanny, Payroll, Taxes & Labor Laws

If you are a household employer in New York State, you may be required by law to provide and maintain workers’ compensation coverage for your nanny or other household employee.

New York Workers’ Compensation Requirements

Household employers in New York are required to have workers’ compensation coverage for any employee working 40 hours or more per week. This applies to live-in and live-out employees.

How Workers’ Compensation Benefits the Employer

A single work-related injury or illness could leave an employer liable for thousands of dollars in medical bills and lost wages. Workers’ compensation insurance is considered a benefit to the employer because it covers necessary medical bills and a portion of the employee’s wages if they become injured or ill on the job, ultimately protecting the employer from a lawsuit. Another benefit is the security knowing that coverage is available in the event of an employee injury on the job.

How Workers’ Compensation Benefits the Nanny

In the event of an accident or illness while on the job, having workers’ compensation ensures that medical coverage will be available and some of their lost wages will be paid.

What is the difference between Workers’ Compensation and Disability Insurance?

Workers compensation protects the employer if their employee is injured on the job or becomes sick as a result of a work related illness. Disability insurance is an employee benefit that compensates employees for some lost wages due to an illness or injury that is not work-related.

What does Workers’ Compensation cover?

Depending on state laws and regulations, workers’ compensation may cover:

  • Medical expenses
  • Rehabilitation services
  • Compensation for some lost wages
  • Vocational training, if necessary

Is Workers’ Compensation Covered Under a Homeowner’s Policy?

Household employers should never assume that this liability is covered under their Homeowner’s Insurance Policy.

There is a difference between someone visiting your home slipping and falling or even a worker like a plumber or electrician getting injured while working in your home, and having someone employed in your home for 20, 30, 40, 50 hours a week.

A single work-related accident could leave an employer liable for medical bills and lost wages, so it is important to ensure you are covered.  When in doubt, check with your Homeowners insurance carrier.

Workers’ Compensation Penalties

Not having required workers’ comp is one of the costliest mistakes a household employer can make. Fines can be as high as $5k for every 10 days of non-compliance. That’s $15k a month and it’s not uncommon for fines to quickly reach tens of thousands of dollars.

How Employers Can Get Caught Without Workers’ Compensation Insurance

This happened in New York to a family that was paying their nanny off the books. Their nanny fell down the stairs while carrying a baby. The baby was OK but the nanny injured her back.

She went to the hospital and the doctor asked how the injury occurred. The nanny responded that she was working at the time, so it became a workers’ compensation case, even unintentionally. ​

The nanny missed several weeks of work. She expected her medical bills to be paid and receive her typical pay while she recovered. ​The family didn’t want to pay her because they’re already paying another caregiver to cover for the injured nanny. ​

The family was exposed for paying their nanny illegally. Why? Because they didn’t have workers’ compensation. ​They dealt with back taxes owed plus fines and penalties on those back taxes. And they dealt with fines for not having workers’ compensation, and in New York that’s $2,000 for every 10 days without coverage.

You can see how that adds up quickly. On top of that the family paid the employee’s medical bills, lost wages, and a fill-in nanny and needed to find another employee as they damaged the relationship with their nanny.​

Don’t Take the Risk

Having workers’ compensation insurance is the law, it benefits you and your employee, and it’s not worth the risk to avoid it. Obtain a free Workers’ Compensation quote from our friends at GTM Payroll Services, and please contact us for more information.

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