AN UNINSURED INJURY CAN RUIN A FAMILY FINANCIALLY.
Imagine this: You just found the perfect nanny to take care of your little one as you are now returning back to work. You hire the nanny and pay her $500 cash each week. Six months later, she slips on the stairs while taking down some laundry. She hurts her leg, fractures her wrist and needs several weeks off from work to recover, plus physical therapy.
You assumed she was an independent contractor, and thus it's on her, covered by her own insurance. But it turns out she is your employee. Because she got hurt while working for you, it’s your responsibility. You find out that you were supposed to have worker's compensation insurance.
Many household employers have no idea this may be required by their state, and it’s just a plain good idea. What is worker's compensation insurance? If an employee is injured on the job, it covers lost wages and medical costs regardless of who is at fault. If your employee accepts the payment from the insurance company, this also provides extra protection from lawsuits.
Sometimes homeowner’s insurance policies automatically cover household employees, but it's critical to check. For example, a California employer who has an employee who works over 20 hours/week may need a rider added to the policy.
In addition, If you aren't paying legally, and your employee gets hurt on the job, your insurance company could deny coverage based on tax fraud. Every insurance company is different, so you need to ask.
If the nanny injured herself due to negligence on your part, she could decide to take legal action.
A lot of folks are simply unaware of the risks when they pay under the table. The number one clear reason for an employer (beside the fact that it is the law) is to stay protected.
Nest Payroll is passionate about helping employers pay their household employees legally. If you'd like to be notified when Nest Payroll is available for you, we'd love to add you to our growing community!