Reprinted from February 2007
Many states mandate that household employers obtain a Workers Compensation Insurance Policy. The legal requirements for obtaining this insurance vary widely from state to state, with wages paid or hours worked usually the defining item, not job description.
Workers compensation insurance protects the domestic employee and the employer from the expenses and liabilities associated with a work-related accident. A single accident can leave the employer liable for thousands of dollars in medical bills. Don't assume that this liability is covered under your Homeowner's Insurance Policy!
I have been working with a client for the last week or so who has a claim pending. The nanny slipped on the stairs and hit her head on a balustrade on her way down. The nanny was dazed and her frightened 5 year old charge called 911. The nanny was taken to the emergency room and a concussion was eventually diagnosed. After about 8 hours at the hospital, she was released to her husband's care and advised to follow up with her regular physician the next day. All in all, the nanny will be fine and the employer got off relatively lucky too.
Total costs are not in yet but look like they will be in the $1000 - 2000 range. This client did not have the state mandated Worker's Compensation insurance (Maryland) and is personally liable for these costs. Yes this is a large unplanned expense, but it could have been much, much worse. This client is a licensed medical professional, and I suspect the amount of lost client billings for the time she has spent over the last several days dealing with this will exceed her out of pocket costs.
The US Department of Labor compiled a list of workers compensation insurance requirements by state as they apply to household or domestic employment. This 2006 document is the most recent compilation.