The Pros and Cons of Including Workers’ Compensation in Your Nanny Contract in North Carolina
BY ELISE SILVER AND HEATHER RUSSELL
When employing a nanny in North Carolina, families often consider whether to include workers’ compensation coverage as part of the employment agreement. While workers’ comp isn’t always required for private household employers, there are several reasons why it may still be worth considering. Below, we’ll break down the pros and cons to help you make an informed decision.
What Is Workers’ Compensation?
Workers’ compensation is a type of insurance that provides wage replacement and medical benefits to employees who are injured on the job. In the context of a nanny, this could cover medical costs or lost wages if they were injured while caring for your child, lifting equipment, or even slipping on a wet floor in your home.
Pros of Including Workers’ Compensation
1. Peace of Mind for Both Parties
Workers’ comp protects both the family and the nanny by ensuring that any work-related injuries are covered without dispute. For families, this reduces the risk of potential lawsuits, as accepting workers’ comp generally waives the nanny’s right to sue for negligence.
2. Shows Professionalism
Including workers’ comp in your nanny contract sets the tone for a professional employer-employee relationship. It demonstrates that you value your nanny’s well-being and are committed to providing a safe and supportive work environment.
3. Legal Protection
While North Carolina doesn’t require workers’ comp for household employees unless there are multiple employees, having it can shield families from unexpected financial liabilities. If your nanny sustains a serious injury, medical costs and lost wages can quickly add up. Workers’ comp ensures those costs are covered by insurance rather than coming out of pocket.
4. Attracts Top-Tier Candidates
Offering workers’ comp can make your job posting more appealing to experienced nannies who prioritize positions with benefits and security. This could help you attract and retain high-quality caregivers.
5. Tax Benefits
Workers’ comp premiums are typically tax-deductible as a business expense, which can offset some of the costs for families who are considered household employers.
Cons of Including Workers’ Compensation
1. Added Cost
The most significant drawback of workers’ comp is the additional expense. The cost of premiums depends on factors like the nanny’s salary, job responsibilities, and the insurer, but this can be a substantial yearly expense for families operating on a tight budget.
2. Administrative Hassle
Setting up and maintaining workers’ comp coverage requires time and effort. Families need to register as household employers, which may include obtaining an employer identification number (EIN) and filing specific paperwork.
3. Potential Misunderstandings
Some families worry that offering workers’ comp might create a perception of mistrust or introduce legal complexities into an otherwise straightforward employment arrangement. Clear communication is essential to ensure both parties understand the purpose and benefits of this coverage.
4. Not Always Legally Required
In North Carolina, workers’ comp isn’t required for families employing a single nanny. This makes some families question whether it’s necessary, especially if the nanny’s duties are low-risk and the family already provides other benefits like health insurance or paid sick leave.
Key Considerations
Risk Level: If your nanny is responsible for physically demanding tasks, such as lifting a heavy stroller up and down stairs, or works in an environment where accidents are more likely, workers’ comp may be a wise choice.
Family Budget: Assess whether your family can comfortably afford the added expense while still offering competitive pay and other benefits.
Nanny Preferences: Some nannies may specifically seek positions with workers’ comp included, especially those who have experienced work-related injuries in the past.
How to Add Workers’ Compensation to Your Nanny Contract
Consult a Tax Professional or Attorney: They can advise on the specifics of workers’ comp laws in North Carolina and help you determine the best way to include it in your nanny contract.
Choose a Provider: Research insurers that offer workers’ comp policies for household employers. Some companies specialize in domestic employment and offer tailored coverage options.
Outline the Details: Clearly state in the nanny contract that workers’ comp will be provided, along with any other benefits. This transparency helps avoid misunderstandings down the road.
For more insights on creating a strong employment agreement, check out our blog on The Importance of a Nanny Contract: A Win-Win for Nannies and Families.
Deciding whether to include workers’ compensation in your nanny contract requires weighing the pros and cons carefully. While it can involve added costs and effort, it provides significant benefits in terms of protection, professionalism, and peace of mind.
At Silver Lining Doula & Nanny Services, we specialize in helping families create thoughtful, comprehensive nanny contracts that suit their unique needs. Whether you choose to include workers’ comp or prefer to exclude it, we’re here to guide you through the process, ensuring all details are clearly outlined to foster a strong and secure working relationship. Let us help you find your silver lining and set the foundation for a successful nanny placement!
