How can I minimize risk when employing household staff?

Most people acquire their wealth through career success. With time at a premium, private staff—nannies, housekeepers, drivers, gardeners, chefs and others—often become critical members of the household. There are many benefits to the presence of full-time staff, such as a lessened chance of burglary and overall property damage.


However, there are risks. Because many household employees become extended members of the family that seemingly ideal living situation can blur the lines that all workers need to remain effective. In addition, household employees’ unfettered access to loved ones and valuables makes it imperative to exercise extreme diligence in their management. If, for example, a working relationship ends, employers’ assets and privacy could be compromised. Here are two real-life examples:


  • A gardener was fired for habitual tardiness. He sued his employer for wrongful termination, stating he was never advised of set working hours.
  • A housekeeper was let go because her employer regarded her performance as inadequate. When the employer hired a new, younger housekeeper, the original employee sued for wrongful termination and age discrimination.

What you can do: Three key steps

1. Consider your home a workplace.

Corporate human resources departments formalize everything from recruitment to annual performance reviews. If a problem arises, documentation can help protect the company. Take that same approach with your household staff. Reputable firms can help you screen candidates, conduct effective interviews and implement structure once employees are on board.


For example, residential staffing consultancies recommend drafting a “pre-hire” guide outlining pertinent details before a new hire’s first day, such as:


  • A recap of goals, roles and responsibilities
  • Clarity on who will supervise the employee and where to go with questions
  • House rules, including security measures and how to interact with family and guests
  • A list of daily and weekly duties

2. Manage proactively.

One home’s rules may not apply in another. Think about the features of your residence and the related instructions you want to impart. As an example, consider this: an insurance claim result from art damaged by a well-intended housekeeper. She used the wrong cleaning method, ruining the surface of the piece. Proper training could have avoided that loss.


In addition, employees should not be expected to operate outside their areas of expertise. Another claim: a child was seriously injured on a backyard playground during a friend’s party. The parents sued, alleging failure to provide adequate supervision and security. As it turned out, the hosts had asked an on-staff maintenance worker to help out during the party, even though he had no training or background in child care.


3. Protect yourself.

Ensuring adequate insurance protection is critical for any employer. The following coverages are designed to protect your family, assets and private staff from common exposures:


  • Excess liability insurance responds after primary coverage limits on home, automobile or watercraft policies are exceeded. In today’s litigious society, jury awards and settlements very often eclipse those initial limits.
  • Employment practices liability insurance responds to claims of wrongful termination, sexual harassment, discrimination and other employment-related suits private staff may bring. This insurance usually is an add-on to an excess liability policy, but a stand-alone policy can be purchased when appropriate.
  • Workers’ compensation insurance covers expenses related to medical care and rehabilitation if an employee is injured on the job.

In general, household staff can allow you to focus on what matters and are an enormous help. With simple management techniques and appropriate insurance coverage, you can rest assured that “help” is never a hindrance.


Last updated: Friday, April 28, 2017

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AIG Private Client Group is a division of the member companies of American International Group, Inc. (AIG). Policies are underwritten by member companies of AIG, including AIG PROPERTY CASUALTY COMPANY. This is a summary only. It does not include all terms and conditions and exclusions of the policies described. All references to claim settlement information are based on the loss being covered by the policy and are subject to change without prior notice. Please refer to the actual policies for complete details of coverage and exclusions. Coverage and supplemental services may not be available in all jurisdictions and are subject to underwriting review and approval. Services provided by third parties are not guaranteed by AIG Private Client Group and may be discontinued at any time.

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