Household Employees Create Legal Issues for Doctors

If you've followed the last few installments I've shared with Physicians Practice readers I discussed some examples of non-medical asset protection issues taken from the headlines including both Bruce Jenner's car accident and the private plane crash Harrison Ford was involved in. These examples highlight specific exposures I've addressed in detail before, including this week's look at employment law issues, highlighted by two separate lawsuits against Mariah Carrey by domestic employees; one a nanny and one maid and household assistant.

Two pending lawsuits naming both Carey and her husband comedian Nick Cannon center around similar and very public allegations by two different employees that relate to wage and labor claims, including massive amounts of unpaid overtime. In one case the employee claimed 60 hours of overtime beyond the 40 hour work week, as she claims to have been on call up to 24 hours a day. The suit was filed in December and the employee and her lawyer want damages going back seven years. The latest suit by the family's nanny has nearly identical allegations and comes after she worked only four months and was paid over $6,000.00 dollars a month.

Regardless of the veracity of the claims and the legality of the way the employees may have been treated, the damage has been done, significantly affecting the employers' reputations and generating substantial legal defense fees regardless of there being an actual award in the future. Should the employees prevail in their lawsuits the damages calculated by their lawyers will certainly be six, if not seven figures.

The frequency and exposure of lawsuits by various domestic help is a serious and growing threat. In the last few years I have seen more claims by domestic staff including maids, nannies, housekeepers, cooks, gardeners, personal trainers, etc. than ever before. Claims include wage and labor issues, sexual harassment, personal injury, wrongful termination, and discrimination. In other words, all the same issues you'd be worried about in a business setting but which are seemingly ignored at home.

The reputational damage and media attention that comes from these claims can be damaging in many ways beyond just a lawsuit judgment itself. It's not just a concern for celebrities and CEOs, as I've seen it affect promotions, partnerships, contracts, political aspirations, endorsement deals, and even stock prices.

I advise all my clients who have domestic employees to have the following safeguards in place:

• A written employment agreement that includes mandatory mediation and arbitration provisions as well as a confidentiality agreement. This is especially important if you share some domestic employees with others. We regularly hear of cases where a domestic employee shares the intimate details of his or her employer's family life, personal discussions, interpersonal issues, and even finances with others whom they work for or with. Considering the intimate proximity in which these employees work can you think of an instance of something in your home you wouldn't want repeated to anyone else? Most of us certainly can.

• EPLI (employment practices liability) insurance - this covers you against lawsuits by your staff and potentially worker's comp coverage.

• A high-limit personal liability policy on the home with an umbrella of at least $2 million, and based on your net worth, maybe higher.

I would add an extra word of caution to recent immigrant physicians who are considering bringing a nanny, cook, or house keeper from "the old country."

Some of the most egregious cases and awards I've seen nationally involve claims in which an employee's reliance on you is seen as inherently prone to abuse. This is especially true if they don't have a command of English, no real cash or credit cards, or if you "hold" their passport for any reason. Juries don't feel sorry for people with household help. When you employ household help, act accordingly, and remember that your legal status is "employer," not friend.

Next week, I will look at important tax issues with domestic employees that the majority overlook, including how paying someone less than $200 per month can involve tax fraud, if not done right.