How do you know the housekeeper you just hired won’t try to steal a piece of valuable jewelry? Can you tell if the new landscaper is hatching a plan for a big payday by claiming a serious injury on the job? Predicting the future is a lot to ask, but doing your homework will help avoid hiring a dishonest domestic employee.
Know the Risks
Nannies and housekeepers are the most common domestic hires, followed by elder caregivers, butlers, and caretakers. The U.S. Bureau of Labor Statistics projects that the demand for childcare workers (one third of whom are employed domestically) is on a double-digit upswing at least through 2014. Although inspiring stories about nannies and caregivers are many, a quick glance at recent headlines reminds us that it’s prudent to tread carefully. Cautionary tales include:
- A former nanny who was sued by high profile employers after she talked about their private lives to media. She then filed a countersuit alleging she was mistreated.
- A housekeeper who stole more than $250,000 from a sports professional. The housekeeper was then charged with depositing forged checks into her personal bank account.
- A former housekeeper who was charged with the theft of 454 bottles of her employer’s rare wine collection.
The three major risk categories related to domestic employees are: inviting a dishonest or dangerous person into your home, being subjected to a lawsuit from a disgruntled employee, and getting charged with a workers’ compensation claim.
You can manage your exposure effectively in all three cases by applying the following techniques.
Find Good People
When hiring a domestic employee you must screen thoroughly, advises Michael Guidry, CEO of The Guidry Group, a Texas-based international security consulting firm offering personal protection services for high net worth individuals.
“Always ask for personal references,” Guidry says. “Conduct extensive interviews and check references. Perform a comprehensive criminal record background check.”
Guidry cautions against relying solely on references. “Many list personal references that often times are family members of the candidate. Family will always say good things or things they know you want to hear.”
Employment agencies can be a good source for finding prospects and Guidry notes that it’s prudent to determine the agency’s screening process and whether the process meets with the level of risk that may be involved.
Guidry advises to always ask for: date of birth, driver’s license number, and addresses over the past 10 years. If the prospect is from a foreign country, ask for his or her full name, passport number or national security identification number. You can use this information to conduct background checks, the most important of which is the criminal history check.
“The records of each county where an applicant has lived or worked must be checked separately, ”Guidry recommends.“ At the very least, a criminal check of the counties of residence and employment for the past five to seven years should be performed.” A credit header check will uncover addresses from the past seven years, potentially revealing inaccuracies in the job application. Always undertake a criminal history check at the federal level or a multi-jurisdictional criminal database search to include “Wants and Warrants.”
Guidry stresses that all employers read and understand the Fair Credit Reporting Act (FCRA), which governs the use of background reports. For all searches, the employer must have the candidate sign a disclosure and release form. No data searches may be performed without this completed form. At the same time, having the form signed allows the employer to re-check those same databases during the course of the employment period. He does caution that any applicant denied employment as a result of a background report credit check or motor vehicle report does have the legal right to dispute the findings.
The Guidry Group performs employee screenings and is familiar with the rules and regulations of using the reports. Guidry says: “We do have easy access to court records and can make sure that you are in compliance with the FCRA.” Fireman’s Fund policyholders receive preferred pricing from The Guidry Group through our network of prescreened solution partners.
Protect Yourself from Lawsuits
Aside from the possibility of hiring untrustworthy people, you are vulnerable to lawsuits from domestic staff – or even from people alleging negligence in cases involving domestic staff. For example, after a young child tragically drowned in the pool at the house of a high profile entertainer, the child’s parents sued for $10 million. A jury found the homeowner not guilty, stating that two nannies entrusted to watch the child were responsible. While this homeowner was spared, similar cases have succeeded.
“An option to the Prestige Excess® personal liability policy from Fireman’s Fund protects you from possible suits brought by domestic employees,” says Eric Shanks, senior vice president for personal insurance for Fireman’s Fund. The Prestige Excess option, called Employment Practices Liability (EPL), features:
- High limits and broad coverage
- Payment for legal defense costs
- Payment of up to $25,000 to hire an employment practices crisis management or public relations firm to mitigate damages to your reputation
“It’s extremely valuable coverage, and it doesn’t require a lot of paperwork,” Shanks says.
A major risk exposure for employers of domestic staff is on-the-job injuries. A number of insurance carriers, including Fireman’s Fund, offer workers’ compensation coverage for domestic staff. In some cases, carriers offer this coverage within an excess policy and in other cases, it’s offered as a separate policy.
“Laws on workers’ compensation for domestic staff are different in each state,” says Shanks. “You should discuss the issue with your agent carefully to make sure you get coverage that’s right for you, your employees, and your state.”
Adding EPL insurance to your excess policy, purchasing workers’ compensation insurance, and using background checks will help keep you safe from risks related to hiring domestic employees. For more information about Prestige Excess, The Guidry Group, workers’ compensation, and EPL coverage, talk with your independent agent.