Workers' compensation laws protect people who are injured on the job. They are designed to make sure that employees who are injured or disabled on the job are provided with fixed monetary awards, removing the need for litigation.
The California Labor Code essentially tells us that anyone working for a homeowner will be an employee unless you can prove otherwise. Further, California Law tells employers — the homeowner in this case — that they must purchase workers' compensation insurance when any employee works for them.
The standard home policy, with liability insurance, includes coverage for "occasional workers' comp risks." By "occasional," the policy would be intended to provide insurance for your gardener that swings by once a week or your housekeeper that comes in twice a month, or other folks who perform small tasks at your home. The "occasional worker" is defined as someone who performs less than 10 hours outside of the house work or 20 hours inside of the house work.
When the homeowner is going to reach these thresholds, they should contact their insurance agent to change their Homeowner's policy to cover these new events. The costs for this change can vary quite considerably between companies, but it has been my experience that the additional charges are a fraction of the cost of worker's comp for a business operation.
How do you avoid all of these potential risks and threats, plus involvement in the insurance industry? Here is a short list of steps to simplify your life and avoid becoming an employer. First, hire licensed and insured contractors who have their own workers' compensation insurance. Next, hire other service providers who are licensed, if appropriate, and insured.
Any company or contractor that you hire should have liability and workers' compensation insurance. How to know if they are insured? This is the crucial point to understand. Before any organization, business or contractor begins work for you, ask them to provide you with a Certificate of Insurance which will list all of their insurance policies. This certificate will show that, on that date, there is a list of the insurance policies this business has in place listing their insurance companies, the amounts and types of insurance, and the dates the policy started and are to end.
The homeowner, to further protect themselves, should be listed as a Certificate Holder on this certificate. The Liability insurance listed on the certificate should list the homeowner as an Additional Insured, and the page of their insurance policy that confirms this is to be attached to the certificate.
The workers' compensation insurance should show that the business has provided a Waiver of Subrogation Endorsement on their policy. A waiver of subrogation endorsement requires one party on the contract to waive their right to sue for and recover damages from the other party.
In short, what do these worker's compensation terms mean to the homeowner?
First, the Additional Insured means the insurance for the hired business will provide you with some protection on their policy before your insurance policy may be involved in a claim.
Next, the Waiver of Subrogation means that when the businesses' employee is injured at the homeowner's home, the workers' comp insurance company paying for the employee's treatment can't come back to the homeowner to recover what they have paid injured workers.
When in doubt, call your insurance agent to guide you through this process. There are many talented and knowledgeable insurance agents who can help you. So, ask!
California homeowners have a duty to be aware of the workers' compensation rules to avoid fines and penalties. This knowledge can help them avoid legal problems in case a worker gets injured on their property.
