Private Risk Management:

Walking the Line Between Employee & Friendship

When you hire individuals to clean your private residence, prepare food for parties, or care for your children, relationships are born. The domestic staff you hire to run your households or drive your vehicles will come to know you and your family intimately—all the quirks and knowledge of how your family ticks and your level of affluence. 

The nature of each staff member’s role determines the amount of access to private information each holds. Though you might build personal relationships with your staff, managing domestic staff appropriately extends beyond pleasantries exchanged in hallways or providing holiday bonuses – a professional relationship is the foundation. To keep your family’s lives running smoothly and help protect your assets from an insider attack, you should take steps to ensure the strength and security of staffing relationships. 

Who am I hiring?

Today’s reality of hiring—and keeping—trustworthy domestic staff involves regularly performing background checks. Not regularly conducting them is a common pitfall that can thwart the security of your relationship. A thorough background check can provide ample clarity about who may or may not be a good candidate to work in your home. Too many crimes are committed against employers who have domestic staff working in the home, and some of them might have been prevented by having background check protocol in place.  

At times, when an incident occurs involving domestic staff that would be a red flag on a background check, families will take a “let’s work it out between us” approach. This can be a costly mistake. Not properly documenting issues can create more risk, especially if an incident involves criminal activity.   

You’re a member of the family – but you’re not. 

Remember, your home is their workplace, so domestic staff have access to your most private information. Because many families grow close to those they hire, mistakes can be made, such as treating or telling staff they are “like family.” The temptation to give domestic staff a false, unconditional sense of assurance can lead to unwanted consequences.   

Treat your at-home staff as you would any employee in other workplaces, clearly communicating expectations, boundaries, and the requirement for confidentiality. Maintaining a professional relationship between you and your staff will help ensure that you remain compliant with employment laws and can make it easier if you need to have performance-related discussions. 

What should you do? 

No one wants an insider attack to occur, yet the odds of one happening in today’s economy are increasing. When inflation is running high or recession is on the horizon, the threat of fraud increases for affluent families. Often, the theft is from those closest to you—employees who are aware of your affluence. The risk of an insider attack also increases if your efforts to maintain their understanding of your expectations and your due diligence in keeping up with security protocol cease after their onboarding.

Think about implementing these steps to manage domestic staff appropriately and strengthen accountability and trust: 

Set up regular meetings. The intention of holding meetings with your domestic staff regularly eliminates miscommunication and builds trust over time. For staff at other homes outside your primary location, the necessity for frequent communication increases because you’re less likely to see them on a day-to-day basis.  

Conduct frequent background checks. Gather information about your current staff to identify if they are experiencing financial trouble, like bankruptcy or have any recent arrests, like a DUI. Consider conducting background checks at least every quarter. 

Update domestic staff employment manuals. Having a proper foundation for both employees and the employer to rely on can prove valuable when the unexpected occurs. Update the manual when changes occur, such as a change in job duties or additions to confidentiality expectations to ensure everyone is on the same page.  

Include status updates on domestic staff with your team. When you meet with your accountant, investment manager, insurance advisor, and attorney, each should be aware of any changes to your staff roster or their responsibilities. Having access to a multitude of experts with niche expertise can provide you with insights you may overlook to further help protect your assets and family. 

Use insurance and risk management to strengthen relationships. By working with your insurance advisor, you can maintain a relevant, personalized risk management and insurance program that simultaneously enables your staff to do their jobs and protects you and your family from the many risks that come with employing them. Talk to your insurance advisor about workers’ compensation and employment practices liability insurance, as well as hiring and employment best practices to continually manage these dynamic risks. 

Employing a nanny, driver or private chef ranks high on the list of ways to save time when your business or philanthropic duties collide with responsibilities in the home. These individuals whom you employ become precious and intimate relationships, established and grown in your home. For these domestic staff, however, your home is their workplace.  

Beyond private family photos that grace personal library shelves, domestic staff have an up-close-and-personal view of you and your family’s lives. They witness everything from bedtime for little ones to non-profit board meetings held at your residence. And housekeepers often have access to your most private quarters, which may include your office where your financial information is stored. 

Not everyone conducts a thorough background check, let alone regularly, when employing domestic staff. Sometimes individuals consider household rules enough protection to ward off potential risks. But with increasing theft and other crimes in private residences taking place these days by domestic staff, conducting a background check regularly can help prevent an insider attack. 

PROTECTING YOUR FINANCIAL FUTURE

No one wants an insider attack to occur that threatens emotional or physical harm to loved ones but often, financial harm can also take place. However, the financial risks are often overlooked because a thorough background check was not performed. Doing due diligence to ensure those whom you employ at home carry no red flags helps lessen the risk of potential losses. Those red flags may include bankruptcy, liens, lawsuits, or collections. 

PROTECTING YOUR PRIVACY & FAMILY

Domestic staff are privy to your personal lives, they work for you, and you pay them. In a down economy, the threat of fraud increases for affluent families not necessarily from domestic staff, but from those close to your employees who are aware of your affluence. 

Sometimes, they may live in your home and travel with you and your family—or sometimes, alone with your dependents. Are they using their own transportation or one of your vehicles? Are they safe drivers? How much auto insurance do you need?  A background check will help determine if  his or her record shows any DUIs or other negligent driving patterns and the type of auto insurance policy needed to help cover any damages or losses that may occur when they are driving your family around. 

REFERRALS BY FRIENDS:  YES, OR NO?
When well-meaning friends or people within the community provide referrals for domestic employees, such as a gardener or driver, this should not be the only “background check” you need. Proper vetting should take place to help protect your family and your assets.  

Without a proper background check, a recommended referral by a close friend regarding a candidate can turn into a costly mistake long term. 

NOT A ONE AND DONE
Background checks are not one-and-done. They need to be performed regularly, especially if new and more sensitive duties are assigned, like caring for children or an elderly parent. Frequent background checks will reveal recent behaviors, which tends to be a stronger indicator of character than past behavior, and show aliases, age, and other personal information that could save you and your family from future problems or raise red flags. 

At times, when an incident occurs involving domestic staff that would be a red flag on a background check, families will take a “let’s work it out between us” approach. This creates more risk, especially if they remain in your employment. If the incident involves criminal activity, you and your family could be cited judiciously, therefore threatening all aspects of well-being for you and them. 

WHAT SHOULD YOU DO? 

Given the risks, here is what you can do to help ensure the individuals you screen are safe to hire. 

Use a trusted service. The best placement firms conduct thorough background checks that use a candidate’s private information, such as a Social Security number, current and previous addresses, driver’s license number, and more.  

Understand it’s more than a credit check. While gathering information about potential bankruptcies, incarcerations, and more is extremely beneficial, the purpose of a background check will show any signs of previous offenses, such as larceny, willful child neglect, or sexual offender criminal history. 

Consult with your team of professionals. Everyone from your accountant and investment manager to your insurance advisor and estate planning attorney should be aware when you employ domestic staff. Because labor and tax laws change, they must be kept informed.   

Add international background checks to your research. When using a proper firm to conduct a candidate’s background check, ask them if they also perform an international search. Not all firms do, and you want to protect against any surprises. 

Set expectations with a domestic staff employment manual. The manual should include a mutually signed employment agreement, a list of job duties, potential reasons for termination, and confidentiality expectations. 

Get proper insurance. Work one-on-one with your insurance advisor to help develop a risk management program to fit your unique needs. Besides the potential need to have your domestic staff listed on your personal auto and umbrella policies, additional policies could include worker’s compensation, which pays employees in the event of a job-related injury or illness, and employment practices liability insurance (EPLI), which protects you against claims of discrimination or sexual harassment. 

HIRE WITH CONFIDENCE 

While these steps you take to conduct background checks with regularity are not an exhaustive list, they are a good place to begin the due diligence process to help prevent an insider attack.