Thinking about hiring domestic staff? Following these smart practices will help minimize risk

Mary McGrathEmployee Benefits, Homeowners Insurance, private client group insurance, Risk Management, Workers Compensation

Busy professionals reaching ever higher levels of success often find that as their assets grow, free time shrinks. To recapture some of life’s most precious and ever dwindling commodity, many families hire domestic staff in the form of housekeepers, nannies, drivers, chefs, and other personal service providers.

Once your family’s needs go beyond just having a weekly cleaning service for some laundry and light dusting, you may be considering retaining full- or part-time employees to tackle a variety of tasks, including childcare and elder adult care.

Before doing so, it pays to have a comprehensive risk management strategy in place that will protect your financial assets and more importantly you and your family members against a new suite of potential perils that come with the territory.

Best practices for hiring domestic help start with proper screening procedures and continue with having the right insurance in place. Indeed, there’s really no difference between hiring someone to help in your personal life versus hiring a new employee at your business.

Too many smart executives, who wouldn’t dream of hiring a key employee who didn’t undergo a substantial vetting process, don’t follow that same practice when hiring someone at home — even though domestic employees may have unlimited access to their home, knowledge of financial affairs, credit/debit card privileges, driving duties, and most importantly, unsupervised responsibility for the safety of children or elderly parents on a daily basis.

Whether you’ve already employed domestic staff or are just thinking about it, here are several aspects to consider, courtesy of our partners at ACE Private Risk Services.

The laws are complex — The U.S. Department of Labor, Equal Employment Opportunities Commission, and Fair Labor Standards Act each have a strict set of guidelines for families employing domestic staff to follow. Each state also has its own labor department with guidelines. Violating these guidelines can result in fines and liability lawsuits that are not only costly but damaging to a family’s reputation. Is your new hire an employee or independent contractor? What are the tax implications of hiring a domestic employee? What are your obligations to pay overtime and how is it measured?

You’ll need a team — To answer these important questions and to help with other aspects of hiring domestic help, you should seek guidance from a range of experts, including household risk advisors, attorneys, accountants, employment agencies, background checking firms, identity theft consultants, and insurance agents.

It pays to be thorough — These advisors can help perform a comprehensive screening process that includes substantial background checks, interviews, reference checks, and document validation. In addition, they can write employee contracts and produce an employee manual that clearly spells out expectations for all parties.

You’ll need more than the typical insurance portfolio — Even the best household management practices cannot completely eliminate all risk. Insurance plays a critical role. At Sinclair Risk, we’ve helped many high-achieving families manage risk associated with hiring and employing domestic staff. We work with carriers that offer comprehensive insurance coverage that protects against perils such as reputation damage, kidnap and ransom, and other perils that the average household does not face. Talk to us today about how we can help you navigate the complex world of employing domestic staff.

Mary McGrath

mmcgrath@srfm.com 

Mary McGrath: Personal Lines Department Manager