In some cases costs can escalate, especially if clients have domestic staff and no coverage. One of Chubb's offices recently settled a dog-bite claim for $2.5 million. According to Fiske, the reason it settled for such a high amount is that the dog had bitten the domestic worker previously, and the client had asked the employee not to tell the hospital it was the family dog. The dog bit the employee a second time, however, and did serious injury. The employee sued the employer, and Chubb paid the $2.5 million.
Sometimes it takes a securities firm to lower the risks in hiring domestic employees. Paul Viollis Sr., CEO of Risk Control Strategies Inc. in New York City (http://www.riskcontrolstrategies.com), a consulting firm that serves as a security advisor to the affluent community, says approximately 50% of the resumes his firm examines contain either exaggerated or false information, and typically one out of three background investigations turn up information that requires either additional investigation or consideration for disqualification.
"You have to investigate each venue of the subject's adult life on the ground as opposed to online," says Viollis. "Online searches are valuable, but they're just a portion of the process."
Costs typically range from $500 to over $2,000, depending on where the person has lived and how many places of employment they've had, says Viollis. For example, if they come from Canada as opposed to the Eastern Bloc, it's less expensive because the information is more readily available.
What if your client's nanny turns out to be an illegal alien? An employer can be subject to potential legal penalties, by virtue of the Emigration Reform & Control Act of 1986, which criminalizes the act of knowingly hiring unauthorized aliens. Penalties can range from civil and/or criminal fines up to and including imprisonment.
Why get involved? "You can help your clients preserve the wealth that they've built up, the loss of which can be catastrophic," says Scanlon. "It's also an opportunity to provide a value-added service, which will help enhance and deepen your relationship."
Bruce W. Fraser is a freelance financial writer in New York City who writes for many prominent publications. He is currently writing a book on millionaires. He can be reached at [email protected].
