The day you hired someone, the house became a workplace.

Employee or independent contractor

This is the hinge. Nearly every other question on this page resolves differently depending on the answer, and it is the question households most often answer wrong, usually by default rather than by decision.

What it does not turn on: what you call the arrangement, whether anything was written down, whether the person asked to be treated as a contractor, whether they work for other families too, or whether they are paid weekly in cash. Those facts can be relevant but none of them decides it.

What it does turn on is the substance of the working relationship, and different agencies apply different tests to that substance. Broadly, the kinds of facts that get weighed include how much direction and control the household exercises over how and when the work is done, who supplies the tools and materials, whether the worker is running an independent business with other clients and their own insurance, whether the arrangement is ongoing or project based, and whether the work is integral to the running of the household.

Applying that test is a legal and tax question, not an insurance one. We do not provide legal, tax or employment advice, and this page is not that. What we can say plainly is that it is worth getting a real answer from your own advisor before a claim makes the question urgent, because the classification determines which policies are even in the conversation.

The usual pattern in practice: a company that arrives with its own crew, its own equipment, its own schedule and its own certificate of insurance looks like a contractor. A person who works hours you set, in your home, with your things, under your direction, looks like an employee. The awkward middle is where most households actually sit, and the awkward middle is exactly where advice is worth paying for.

Workers compensation for household employees

Here is the honest version, because a wrong number here would be worse than no number.

Whether a household is required to carry workers compensation for domestic or household employees is set by state law, and it varies by state. It can also vary within a state depending on the arrangement: the kind of work performed, how the person is engaged, whether the work is casual or ongoing, and how the state defines the relevant categories. Some states also allow a household to elect coverage voluntarily even where it is not required.

We are not going to publish a threshold, an hours figure or a dollar amount for any state on this page, because those details change and because a wrong one could cause a household real harm. Confirm the requirement that applies to you directly with the state agency that administers workers compensation where the person works, and with your own advisor. In our three focus states those agencies are the Oregon Workers' Compensation Division, the Washington State Department of Labor and Industries, and the Idaho Industrial Commission. If a household has staff at homes in more than one state, the question is asked separately for each state, which is part of why multi-home households need this looked at carefully.

Two points that hold regardless of the threshold. First, whether coverage is required and whether coverage is a good idea are different questions, and voluntary coverage is worth considering where it is available. Second, a workers compensation policy and a homeowners policy are different instruments. Some homeowners forms contemplate a limited medical or occupational injury benefit for certain residence employees, sometimes only by endorsement, with definitions and limits that vary by form. That is generally much narrower than a workers compensation policy and is not a substitute where one is required. Confirm against the policy.

Employment practices exposure

Household employment carries the same categories of dispute that any employment carries, with less structure around them. There is no human resources function, no written handbook in most cases, and frequently no documented terms.

The allegations that arise look like wrongful termination, discrimination, harassment, retaliation, failure to pay wages or overtime correctly, and disputes about hours, breaks or leave. They can come from a current employee, a former one, or a candidate who was not hired.

What matters for this page is where such a claim would go. Personal liability forms, including many personal umbrellas, commonly exclude or limit claims arising out of employment practices. That is not an accident or an oversight. Employment practices liability is generally addressed by a separate instrument, and whether one is available to a private household and on what terms varies by carrier and by state. Eligibility varies and it is worth asking rather than assuming.

Beyond insurance, the ordinary practices help more than people expect: a written agreement that states the terms, accurate records of hours and pay, documented reviews, and a clear and consistent process when something goes wrong. Those are employment questions rather than insurance ones, so take them to your own advisor.

Personal vehicles on household errands

This one comes up constantly and almost nobody has looked at it.

A nanny drives her own car to collect a child from school. A housekeeper runs to the market in her own vehicle. An estate manager drives his own truck to pick up materials. Each of those is a person using a personal vehicle for the household's purposes, and there are two separate questions in it.

• Her policy. Personal auto policies are written around personal use, and use of a vehicle for compensation or in a business capacity can be treated differently depending on the form. Whether an employee's own policy responds to driving done for the household is a question about her policy, not yours, and it is worth her confirming with her own carrier.
• Your exposure. A household can face liability arising from an employee's driving on household business, depending on the facts. Whether and how your own policies respond to that, and in what order, depends on the forms. This is a common reason people look at the umbrella, and a common place where they find the wording does not say what they assumed.

There is a third version that is cleaner and still worth reviewing: an employee driving a vehicle the household owns. That is generally a question about the household auto policy and who is a permitted driver on it, and it is worth confirming that anyone who drives a family vehicle is accounted for. Read personal umbrella insurance for how excess liability attaches over auto, and note the employment related wording discussed below.

Fidelity and theft by an employee

Nobody hires someone expecting this, and the households that experience it usually had a long and trusting relationship first. That is precisely what makes it worth thinking about in advance rather than in the moment.

The exposure is broader than jewelry taken from a drawer. It includes cash and property, misuse of a card or an account, unauthorized transfers where an employee handles payments for the household, and inflated or fabricated invoices from vendors an employee engages on the family's behalf. Households that employ an estate manager, a bookkeeper or a household manager with payment authority carry more of this than households that do not.

The insurance treatment varies. Homeowners forms address theft, and how they treat theft by a person the insured has entrusted with property varies by form, sometimes with exclusions or conditions that apply specifically to that situation. Some private client programs contemplate employee dishonesty or fidelity coverage, sometimes by endorsement, and availability varies by carrier and by state. Scheduled valuables sit on their own terms again, which is one more reason scheduling jewelry and valuables is worth doing before there is a reason to.

Practical controls do more here than coverage does. Separate the person who authorizes payments from the person who reconciles them, review statements yourself on a schedule, set limits on cards issued for household use, and run background checks consistently at hiring rather than selectively. Where money is moved electronically on the family's behalf, the verification practices on our personal cyber page apply to household staff as much as to family members.

An injured guest and an injured employee are different claims

This distinction explains why the classification question at the top of the page matters so much.

A guest who is injured at your home is generally a liability matter. The homeowners policy contemplates bodily injury to others arising from the premises, subject to its limits and exclusions, and a personal umbrella commonly sits above it. That is the situation most people picture when they think about somebody getting hurt at the house.

An employee injured while working is generally a different matter. Liability forms commonly exclude bodily injury to an employee arising out of employment, on the reasoning that workers compensation is the intended route for occupational injury. So if a person is an employee, and there is no workers compensation in place, the household may find that the policy it assumed would respond contains an exclusion pointed directly at that situation.

The same event, same staircase, same injury, and the answer turns on the status of the injured person. That is the practical reason to resolve classification and the workers compensation question deliberately rather than by default.

A third category worth naming: a contractor's employee injured at your home. That usually involves the contractor's own coverage, which is a reason to ask for a certificate of insurance from any firm that works at the property, and to actually read it.

What a personal umbrella does and does not do here

Households reach for the umbrella on this subject, and it is worth being precise about what it is.

A personal umbrella provides excess liability above the limits of underlying policies it schedules. For an ordinary personal liability claim arising at a residence, including an injured guest, that is exactly the right instrument and it does what people expect.

Where it commonly does not reach is employment territory. Personal umbrella forms frequently exclude or limit claims arising out of employment practices such as wrongful termination, discrimination or harassment. Many also exclude obligations that fall under workers compensation, disability benefits or similar laws. Wording differs by carrier and by form, which is why the answer for your household is on your own policy rather than on this page.

There is a second umbrella issue specific to households with staff: whether the person is an insured or an additional insured for any purpose under your program, and whether the umbrella schedule reflects the household as it currently is. Hiring is one of the events that should prompt a look at the schedule, along with buying a home, adding a vehicle or acquiring watercraft. An umbrella review is the version of that where we read yours.

What to do with this

A short and honest sequence. First, get a real answer on classification for each person who works at your home, from an advisor qualified to give one. Second, confirm the workers compensation requirement that applies where each person works, with the state agency and with your advisor. Third, read your homeowners form for whatever it says about residence employees, and your umbrella for employment related wording. Fourth, look at theft and money handling controls separately, because that exposure is managed more by practice than by policy.

Then send us the declarations pages. A coverage review is educational, has no pricing attached and no obligation, and regularly ends with us saying most of the program is fine and two things are worth changing. If you want terms, start with a private client quote. The private client overview shows how this sits alongside the home, the vehicles, the collections and the liability, and the learning center collects the underlying answers.