Smart Risk Management Strategies for Domestic Workers

The demand for domestic workers in the United States is growing rapidly. The Bureau of Labor Statistics reports that in some areas of the country, the number of domestic workers quadrupled between 2001 and 2016.

The services these domestics render are great and multifarious, but so are the risks for the household employer. The following are some ways for you to mitigate the risks of employing domestic workers and for ensuring that these workers have the proper protection as well.

  • If hiring domestic workers directly, run a background check on potential domestics to see if they (1) are US citizens, (2) have a history of filing lawsuits, (3) have credit problems, or (4) have a criminal record. If using an employment agency, verify the above steps are performed. Avoid hiring domestics with blemished records.
  • Check with your insurance agent to see if you need to procure workers compensation coverage. Your agent will be familiar with your state laws concerning this issue. Of course, you may choose to voluntarily provide workers compensation coverage, which may be a good idea.
  • The advantage of workers compensation coverage is that it provides broader protection (e.g., disability payments) than your homeowners policy, including unlimited medical expenses in most states.
  • If an outside agency is used to hire your domestic, verify the worker has workers compensation coverage. Obtain a certificate of insurance from the employment agency on an annual basis showing this coverage.
  • Prepare a well-organized and documented human resource file for every domestic employee. In addition, you should have an employment application as well as an employment manual or handbook.
  • Procure an employment practices liability policy if you have multiple domestic employees. This coverage can protect you from a wide variety of lawsuits, including allegations of discrimination, wrongful termination, harassment, and slander. A personal injury endorsement under your homeowners policy is also recommended.
  • Discuss with your insurance agent the possibility of increasing the personal liability and medical payments limits under your homeowners policy to the highest available limits, particularly if workers compensation benefits are not required or purchased. A personal umbrella policy is also recommended.
  • Consider some type of fidelity bond for these employees, particularly for new employees. This bond will protect you if the domestic worker commits a dishonest act in your employment (e.g., theft of jewelry). If an employment agency or service provides these employees, verify that the employment agency has purchased fidelity bonds on them and ask for a copy of the bond certification form.


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