For household employers, workers’ compensation insurance is more than just a good idea, it’s typically a legal requirement and critical financial protection. This policy ensures your employee receives help paying their medical expenses and wage replacement if they suffer a work-related injury or illness. Many states require workers’ compensation, including California.
Our friends at GTM provide more information about what you need to know.
Why Do I Need Workers’ Compensation?
Failure to secure the required workers’ compensation insurance exposes you to significant financial risk. Your employee can take legal action to recover their medical and related costs and lost wages from workplace incidents. This policy is your shield against potential financial disasters. It also ensures that your valued employee receives monetary assistance for medical care and wage replacement if they need to miss work due to a job-related injury. You’ll foster a positive relationship between your employee, as they know you have their best interest in mind. Obtaining voluntary coverage, which can be as low as a few hundred dollars a year depending on your state, provides the same benefits to your employee, giving them peace of mind knowing they’ll get the financial help they need if an injury occurs on the job.
California
Workers’ compensation is required for any domestic worker – including one who cares for and supervises children – employed 52 or more hours, or who earned $100 or more, during 90 calendar days immediately preceding the date of injury or last employment exposing such worker to the hazards of an occupational disease.
The law excludes workers employed by a parent, spouse, or child.
Coverage is normally added to your homeowner’s insurance. If not, you can obtain a policy through the California State Compensation Insurance Fund. The annual premium is based on an employee’s annual salary. The state monitors quarterly tax filings and conducts a year-end audit to make sure the employer paid the correct premium.
California Division of Workers’ Compensation
Can I Get in Trouble For Not Having It?
More than 20 states require workers’ compensation for household employers at some level. Don’t make the mistake of thinking you won’t get caught without it. It’s a surprisingly common and expensive error for household employers. A single incident can trigger significant medical bills, lost wages, and fines for non-compliance.
For example, in New York, household employers who fail to secure workers’ compensation coverage face penalties of $2,000 for every 10-day period of noncompliance.
While obtaining required coverage at any point is always a good idea, a workers’ compensation policy must be in place beginning with your employee’s first day of work to avoid penalties for noncompliance.
GTM Payroll Services relieves the administrative hassles of household payroll for domestic employers by proviing a one-stop shop for payroll, tax filings, compliance and insurance. No risk. No hassles. No worries. If you or your employer have any questions about domestic employment, call (1-800-929-9213) or email GTM for a free, no obligation consultation.