hired help

Hired Help: How to Reduce Your Liability

If you are looking to hire someone to provide additional assistance around the house—whether it’s watching your children, cleaning, cooking or gardening—you have a lot of things to consider. Specifically, you will need to determine where to find assistance, what your insurance needs are and how to fulfill your legal obligations when utilizing such services.

Ignoring these important steps could result in poor service and significant liability concerns. That being said, be sure to follow this guidance when hiring domestic workers.


Hiring Domestic Workers


Tips for Hiring a Service Company

  • Check references and your local Better Business Bureau to verify the company’s reliability. Take note of any complaints filed against the company.
  • Ask the company how they conduct background checks on the employees they provide.
  • Ask to see proof of insurance in case your property is damaged by their hired workers. In the meantime, make sure your personal property and valuables are properly insured.


Tips for Hiring Through an Agency

  • Follow the same guidelines for hiring a service company.
  • Inquire about the fees charged to you for using the agency’s services.
  • Insist that candidates are individually interviewed and that their criminal and driving records are investigated.


Tips for Hiring an Individual

  • Place an ad in your local newspaper or ask around your community for recommendations.
  • Interview all potential candidates and check their references, criminal backgrounds and driving records. Contact your local police department for more information on how to do so.


Tax Considerations

Fulfilling your legal tax requirements related to hiring domestic workers is simple if you know where to look for information. Visit the IRS website and review the IRS’ Household Employer’s Tax Guide to learn more about this topic. Further, don’t forget to contact your state’s Department of Labor to determine what states laws apply to your situation as well.


Insurance Considerations

Be sure to consult with us when hiring domestic workers to ensure your homeowners insurance policy will adequately protect you against potential liability issues. The costs of a lawsuit with hired help can be very high. To keep liabilities at bay, you’ll first need to determine what kind of help you’ve hired and then obtain the correct coverage to protect against liabilities.


Types of Hired Help

  1. Individuals hired through an outside firm such as a chef or a nurse:
    • Determine if the individual is your employee or an employee of the firm.
    • If the individual is an employee of a firm, obtain a copy of the firm’s certificates of insurance documenting that the firm has workers’ compensation insurance for its employees. If the organization also has health and disability insurance for its employees, then hired help injured on your property will receive medical treatment through the employer.
  1. Occasional employees such as babysitters or neighborhood kids who rake your leaves:
    • If you hire individuals for occasional jobs for your home, you should evaluate your homeowners or renters insurance policy to determine whether you have enough liability coverage.
    • Consider getting more liability insurance by raising your existing amount or purchasing an umbrella liability policy.
    • Learn more about the no-fault medical coverage within your homeowners insurance policy. This coverage allows you to submit medical claims to your insurance company if someone is injured on your property (other than immediate family members). Most people tend to buy only $1,000 worth of this coverage, yet you may want to increase that amount to $5,000 for added protection.
  1. Permanent full- or part-time hired help:
    • If you hire individuals to come work at your home on a regular basis, consult an attorney regarding tax deductions and workers’ compensation issues. Then, contact us to purchase a workers’ compensation policy. This will provide protection for medical care and rehabilitation for injured hired help. It will also cover lost wages if individuals get hurt and cannot work, and death benefits for beneficiaries.

Contact us ASAP when hiring help around the house to discuss your coverages and any possible gaps. If you need to obtain workers’ compensation insurance and do not purchase it, your homeowners policy will not cover damages or penalties brought against you. So, let us help you understand your risks and potential liability insurance solutions for hired help.


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