Household Staff at a Leased Estate: Who Employs Them, Who's Liable

A Woodside owner leased his estate last spring and left the gardening crew in place, the same three-person team that had maintained the grounds for over a decade. The tenant liked them, kept them, started paying them directly in cash, and added a housekeeper of her own. Eighteen months later one of the gardeners was hurt on the property and nobody could answer the first question anyone asks: who employed him?

That question has a real answer with real consequences, and at the luxury tier it comes up on nearly every tenancy. A $35,000-a-month estate almost always has people working on it. Twelve years managing Peninsula rentals, and this is one of the two or three places where a well-drafted lease saves an owner from a genuinely bad outcome.

Three Categories, Three Different Answers

The mistake is treating everyone who works at the property as one group. They aren't, and the distinctions decide who carries the exposure.

Vendors under contract. A landscaping company, a pool service, a window cleaner operating as a licensed business with their own crew, their own insurance, and their own workers' compensation coverage. The company employs the workers. This is the cleanest arrangement and the one I push owners toward.

Individuals paid directly. The gardener who has come every Tuesday for twelve years, invoices nobody, and gets paid by check or cash. However informal it feels, whoever directs and pays that person is very likely their employer under California law, with all the obligations that carries.

The tenant's own staff. A housekeeper, nanny, personal chef, or estate manager the tenant hires and brings with them. The tenant is the employer. But they're working on your property, which keeps you interested in how it's handled.

The category can shift without anyone noticing. The moment a tenant starts directing and paying a worker the owner used to pay, the employment relationship may well have moved with the money.

The Workers' Compensation Problem

This is the exposure owners most underestimate. California requires workers' compensation coverage for employees, and household or residential employees are not automatically outside that requirement. Homeowner policies sometimes include limited residential-employee coverage, but limited is the operative word, and coverage varies enormously between carriers and policy forms.

If an uninsured worker is injured on the property, the injured person has avenues that can reach the homeowner, and the owner may find they were the de facto employer of someone they thought of as a contractor. The practical protection is straightforward: use licensed, insured vendor companies wherever you can, collect certificates of insurance from every one of them, and confirm with your broker exactly what your policy covers for residential employees before a tenancy starts.

Payroll and Classification

For anyone genuinely employed at the property, the classification question matters. Household workers who are directed by the household, work on its schedule, and use its tools generally look like employees rather than independent contractors, and California's classification rules are strict on this point.

Employee status brings payroll tax withholding, wage and hour compliance including overtime, meal and rest break rules, paid sick leave, and written wage notices. Owners who hand someone cash every week are usually not doing any of that, which is fine right up until it isn't.

Household payroll services exist precisely for this and cost very little relative to a $10 million property. If you employ anyone directly at a Peninsula estate, use one.

What Happens at Lease Signing

The moment to sort this out is before the tenant moves in, while everyone is agreeable.

The lease should list the vendors the owner retains and continues to pay, typically the ones protecting the asset: landscaping, pool service, specialty systems. It should state plainly which services transfer to the tenant, usually interior cleaning and anything personal. And it should require that any worker the tenant brings on-site who will hold keys, gate codes, or alarm credentials is disclosed to the owner and background-checked, which is the same standard I apply to vendors in the seven clauses I write into every $30K-plus lease.

It should also require that the tenant's own staff be properly insured, and that the tenant's renters policy carry employer-related coverage where applicable, with the owner named as additional insured.

None of this is adversarial. It's the same instinct behind the rest of the property protection protocol: decide in writing, in advance, while it's a hypothetical.

The Long-Tenured Vendor Problem

The hardest version isn't legal, it's human. An owner has a gardener who has kept those grounds for fifteen years and knows every specimen tree on the property. The owner wants continuity. The tenant may want their own people, or may simply stop using yours.

What I recommend: keep the asset-protecting vendors on the owner's account and build their cost into the rent rather than handing the relationship to the tenant. You keep the institutional knowledge, you keep the insurance relationship clean, and you keep control of how the grounds are maintained, which on an estate with mature landscaping is worth considerably more than the line item. I covered what specimen landscaping and failed irrigation actually cost separately; losing a twelve-year gardener to a lease transition is how those costs start.

Privacy Runs Both Ways

Household staff see everything. For a high-profile tenant that's a genuine concern, and it's a reasonable thing for them to ask about. Confidentiality expectations for anyone working in the home, on either side, belong in writing. Owners with staff who will continue during a tenancy should have that conversation before move-in rather than after an awkward incident.

What to Do Before Your Next Tenancy

• Inventory everyone who works on the property and sort them into vendor company, directly-paid individual, or tenant's staff
• Move directly-paid individuals onto licensed vendor companies where you reasonably can
• Collect a certificate of insurance from every vendor company, and keep them current
• Call your broker and get a specific answer on residential-employee coverage under your policy
• If you employ anyone directly, use a household payroll service
• Put the vendor split, the disclosure and background-check requirement, and the insurance obligations in the lease
• Handle confidentiality expectations in writing, for both sides

The exposure here is quiet until it isn't. An injured worker with no clear employer, or a wage claim from someone paid in cash for a decade, is the kind of problem that costs far more than the administrative effort of setting it up correctly. Set it up correctly.

I manage properties, I'm not an employment attorney. Household employment law in California is genuinely technical and the stakes at this tier are high enough to warrant real counsel before you finalize an arrangement.

If you're preparing a Peninsula estate for lease and want the vendor and staffing structure handled before the tenant arrives, schedule a confidential consultation. I'll walk you through how I set it up and connect you with the right specialists.

Sources

• California Department of Industrial Relations — Workers' Compensation — California DIR
• California Labor Commissioner — Domestic Workers — California Division of Labor Standards Enforcement
• California Domestic Worker Bill of Rights — California DIR
• EDD Household Employer's Guide (DE 8829) — California Employment Development Department
• IRS Publication 926 (Household Employer's Tax Guide) — Internal Revenue Service
• California Department of Insurance — California Department of Insurance