The Pandemic Continues – We’re going to need some help

The Pandemic Continues – We’re going to need some help

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While the new normal may not be “normal”, families have had to develop coping strategies to manage all the extra activities associated with Shelter In Place.   And for many, this means hiring more household helpers.  From nannies to housekeepers to gardeners to home health workers, we’re getting lots of questions about the insurance issues around hiring household helpers.

First, let’s make a big distinction between hiring a company and hiring an individual.  Not so different from the question of a business employer – is this employee a 1099 contractor or a W2 employee.  For the purposes of this article, I’m going to focus on the W2 household employee.

What makes someone a W2 household employee?  The same things that make them a W2 business employee.  You are their sole employer (i.e. you are employing a person, not a business to provide the service), you control their work – the where, when and how, AND the worker is performing tasks associated with your “business” aka household like childcare and eldercare.

As summer ends and parents get back to work, this year, the kids are not going back to school in traditional ways.  And child care centers remain closed.  Both parents and workers need each other so we’ve had lots of questions about hiring nannies lately.  Here’s a few things you’re going to need.

You will need a payroll service.  It’s your job as the employer to collect and pay taxes on behalf of your employee, and to deliver their paycheck in a timely manner..  There are several online services that provide this service.  As a small business employer, I don’t recommend the DIY approach as there are simply too many opportunities for error.  And payroll errors come with big fines.  In our online research for solutions for clients, we found multiple companies specializing in payroll for household employees.   Our favorites for pricing and ease of use are Poppins Payroll and SurePayroll.  The payroll company should help you with all the set up, things like getting a Federal Taxpayer ID, and setting up direct deposit.

You are also require to provide workers compensation insurance.  And this is where it gets tricky.  For people who have homeowners, condo unit owners or renters insurance from an ‘admitted” carrier – think of the name brand companies, the ones that advertise on TV – workers compensation insurance is provided by as part of your home insurance by state statute.  Here’s how the law works.  The trigger is when an employee earns $100 or more in a 90 day period with an exemption for the first 52 hours.  This insurance is designed for long term employees, not incidental workers.  Some companies, like Farmers, the insurance company I work for, sell “gap” coverage for those 52 hours so your babysitters and other incidental employees are covered

Here’s the challenge.  The non-admitted carriers, the ones people are turning to when they can’t get coverage due to wildfire risk or too many claims?.  These companies are NOT required to offer the workers comp coverage.  Instead, homeowners need to purchase workers comp insurance.  The main provider of this coverage is State Fund for Workers Compensation.  A policy for an employee earning $20,000/year runs about $600 for $1,000,000 coverage.  State Fund only works through insurance brokers and agents so you’ll need to ask an agent to help you obtain the policy.

As I close the article, I want to celebrate all the creative ways families are coping with the Shelter in Place order.  Your resilience inspires me.  I also want to take a moment to recognize those who have suffered real hardship, including loss of their loved ones.  As we turn into Fall, I invite you to check in with us.  We are still meeting clients by phone, Zoom, and we also get all masked up to meet clients at their home or business.

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Ruth Stroup Insurance Agency
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