Let’s say you live in Denver and your nanny quits suddenly and files a lawsuit for sexual harassment after your husband purportedly made inappropriate comments to her when they were alone in the house together.
Or perhaps your husband is unhappy with the gardener. You fire him (the gardener, not your husband), and he responds by suing you for wrongful termination due to discrimination.
Or maybe you and your husband both decide to replace the housekeeper – who’s been with you for, wow, a decade! – and replace her with someone not only younger, but cheaper. She then sues for age discrimination and wrongful termination, saying she was never given a reason for her dismissal.
Every one of these scenarios could happen to you and, unfortunately, a homeowner’s policy and even an umbrella won’t help. In fact, the only insurance policy that would fully cover you for any of the above is a standalone Employment Practices Liability, or EPLI, policy.
With coverage limits of $250,000 and up, EPLI policies provide the broadest coverage for employment-related issues.
An EPLI policy covers legal defense costs in the event of a lawsuit, as well as judgments and settlements in cases involving allegations of:
EPLI policies designed for successful families typically also include coverage for a public relations firm to protect their reputation if a plaintiff attorney decides to make allegations, like sexual harassment, public.
The Case for Workers’ Comp
Along with EPLI coverage, families should also carry workers’ compensation insurance in case their domestic employee requires medical care, suffers lost wages, or needs vocational rehabilitation because of a job-related injury or illness.
Under work comp laws, you are liable for injuries to your employees, regardless of whether you were at fault. In other words, without workers’ comp, you could end up paying 100 percent of your employee’s medical bills as well as lost income for the rest of their life.
In case you’re wondering, in Colorado, employers with one or more employees, whether full- or part-time, are required to carry workers’ comp. Anyone hired to perform services for pay is considered an employee.
Moreover, because of that requirement, employees will not be covered by your homeowner’s or umbrella liability policies. Those policies contain specific exclusions for anyone who should be covered by workers’ comp.
For most of us, a nanny, housekeeper or personal assistant can feel like part of the family, especially if they’re living in your home. But downplaying the risks isn’t the right approach. Let us know if you’re thinking of hiring someone to help with the kids or anything else involving your home life. There’s no reason the very person you’ve hired to make your life a bit easier should end up costing you time away from work and family or causing you stress, financial or otherwise.
Mike Rosser leads the Private Client practice at CCIG. Reach him at MikeR@thinkccig.com or 720-212-2068.
CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.