I spoke to a prospective client today on the phone. She just hired a senior caregiver - a woman she calls "Mom's helper" - to come in daily to assist her mother around the house. Her mother has had a series of falls recently, none serious, and needs basic help and companionship at home during the day while her daughter is working. As a sandwich generation daughter of a mother with similar issues with aging, I completely understood why she took this step and the challenges she faces trying to balance her Mom's needs and her own professional and economic needs.
The senior caregiver used to work for a big national senior care chain, one that advertises on TV all the time, and she is accustomed to regular payroll. My caller never thought of payroll taxes until the caregiver questioned her when she was written her first "paycheck." Like many of our callers, she was looking for a way out, a way that she could feel justified in treating Mom's helper as an independent contractor.
The reality is that the caregiver IS an employee. Employee's receive instruction or direction on the job, the employer has the right to tell them what to do, how to do it, when to do it. The caregiver also is paid a wage - she has no opportunity for profit or loss. My caller can also discharge or fire the caregiver for an reason, or no reason at all, without penalty.
I explained to the daughter that this is not ALL negative! No one likes paying taxes or the paperwork of course, but there are some particular benefits to the family here. Unemployment insurance is a big protection for the family and the caregiver. Should the caller's Mom need to transition to more managed care in a facility and no longer need her helper, the worker can file for unemployment benefits. I reminded my caller that these transitions often come with little or no warning - a fall or serious illness can change mom's care needs overnight. I also encouraged the daughter to quickly obtain Workers' Compensation insurance (HWS has a partner who works with our clients on this!). There is a real risk that the caregiver could actually become injured 'helping' Mom, and this is important protection of the daughter's assets should there be an un-insured workers' compensation claim.
My caller enrolled for HWS' NaniPay full payroll service - and completely outsourced the bi-weekly payroll and all tax filing and remittance to us. At the end of the call she remarked that she had been so worried about how to proceed and was so grateful that HWS took the time to counsel her, guide her and point out the relatively easy steps she could take to protect herself and Mom's helper. This client can now focus on what is important to her - the well-being of her mother and helping her realize her desire to age in her own home safely and well cared for.
Hiring elder care is complicated enough balancing the wishes of the aging parents and the risks and responsibilities of becoming a household employer. HWS understands the dynamic. Do you have questions about senior care and aging in place? Call HWS - we are happy to offer you a free telephone consultation.
Employee v Independent Contractor Wizard
Video: Employee or Independent Contractor
The Bracamonte family and their former "nanny" Diane Stretton put the term "Nightmare Nanny" into our vocabulary this summer. The Bracamonte family "hired" Ms. Stretton to care for their children in exchange for room and board, and when the relationship fell apart Stretton refused to move out. That is when the Bracamonte's nightmare nanny story began.
This scenario is so rare and so frightening it became a cause celebre on the news, including such prime-time shows as ABC's 20/20. So exactly what went wrong and how do you avoid this risk when you hire live-in caregivers?
#1 - HIRE AN EMPLOYEE. DON'T EXCHANGE LODGING FOR SERVICES!
An employee is paid a wage for work performed. Household employees such as a nanny or senior caregiver are entitled to some basic labor protections such as pay at no less than the hourly minimum wage, unemployment coverage, and workers' compensation protections. The nanny or caregiver may be provided room and board, but it must be contingent on continued employment (a lawyer can help you here!). The Bucamonte family essentially rented a room to Stretton in exchange for some childcare - establishing a tenancy arrangement that had nothing to do with employment. Stretton paid her rent with childcare.
#2 - A SOLID, WRITTEN WORK AGREEMENT IS ESSENTIAL.
Household employment experts all agree, a written work agreement between the family and the nanny or caregiver is a best practice. This memoralizes the employment agreement, including compensation, benefits (lodging and meals) and other factors that establish the relationship between the employer and the worker. A properly written work agreement (and legal pay) would have precluded Stretton from claiming tenant rights. Tenancy laws vary by state - consult a legal expert in your state for help if you don't feel comfortable going it alone in this area.
#3 - PROPER BACKGROUND SCREENING WILL RAISE RED FLAGS!
Any familiy who is hiring a nanny or caregiver to care for their vunerable family members - whether they be children or seniors - must do thorough pre-employment screening of anyone they wish to hire. All too often a family will 'follow their gut' based on an interview and neglect this important part of the hiring process. Minimum screening should include:
- SSN Trace to verify applicant identity
- Verification of address history
- Criminial records trace using all names used in the prior 7 years
- Sex Offender Registry screen
- National Criminal Records Locator service screen
- Driving records check (optional)
- Civil records check (optional)
- Drug screening (optional)
The news media was quickly able to find detailed records of prior civil court cases involving Stretton - the Bracamonte family could have learned about this in advance too.
#4 - REFERENCE CHECKS SHOULD NEVER BE OVERLOOKED!
Checking an applicant's references can be a tedious process, and families are often in a hurry to staff that caregiving vacancy. No matter how rushed the process, how urgent the need, DO NOT hire a nanny or caregiver without having a detailed conversation with their references, particularly former employers. Keep calling, texting, emailing until you can talk to the reference. A former employer who will not make themselves available for even a brief phone call may be avoiding a situation where they are asked questions they prefer not to answer.
DO YOU HAVE MORE SAFE HIRING TIPS FOR READERS? SHARE BELOW!
Are you a nanny caring for young children or a senior caregiver caring for a frail adult? Do you employ a nanny or senior caregiver? Does this caregiver know how to reach important parties in an emergency? Every caregiver should be provided with an Emergency Contacts list at the start of employment.
Consider the story of our clients Mike and Maryanne. Maryanne is an elementary school teacher. Mike is retired, and is living with early-onset dementia and diabetes. Maryanne and Mike hired a daily caregiver to keep Mike company and supervise his day while Maryanne is at work.
The caregiver's duties include helping Mike take his medication every day at lunch. Maryanne prepares a weekly "pill box" for the caregiver. About a month after the caregiver began working, she noticed that the pill box was not in its ususal location on top of the refrigerator. She looked around the kitchen and living areas and could not find it. She knew that Mike's diabetes medication was very important, and that he needed to take it with his meal. She asked Mike and he didn't know where it was. She then asked Mike where she could find Maryanne's work number to call her. As a teacher Maryanne's cell phone is turned off during class time. Mike became agitated, he (and the caregiver) knew she taught 2nd grade but he could not remember the name of the school. The caregiver knew Mike often remembers information when prompted, and had the presence of mind to pull up a list of county elementary schools on her phone. She calmed Mike down and began reading off the names of the different schools. She worked her way about half way down the list before Mike recognized the school.
This story has a happy ending - the caregiver called the school office and was able to reach Maryanne and resolve the medication issue. The situation did, however, drive home to both Maryanne and her employee the importance of drawing up and communicating emergency contact procedures.
Maryanne called HomeWork Solutions and a team member emailed her an Emergency Contacts Worksheet. The team member also reminded Maryanne that she needed the same information about her employee - who would Maryanne call if the caregiver had an accident or medical emergency?
HomeWork Solutions works with families in all types of household employment situations and has many resources to help families in areas outside payroll processing. These included:
We welcome your phone calls. Don't hesitate to call us at 800.626.4829 if you have a household employment question and we will do our best to connect you with the appropriate resources.
Emergency Preparedness for Nannies and Senior Caregivers
Quality senior care is a challenge millions of families are facing as our aging family members require increasing amounts of personal care services.
Key considerations include:
- A strong desire to age in place
- Limited financial means
- Increased longevity
- Adult children are in the workforce and unavailable to provide care
- Safety, companionship and limited personal care needed
Families decide to hire a senior caregiver to help Mom or Dad, and find themselves faced with yet more challenges including:
HomeWork Solutions' has senior care payroll services, as well as tax compliance services, that are tailored to specifically provide senior caregiver payroll in a simple, family-friendly manner.
Best of all, HWS has trained household payroll specialists who understand the challenges, specialists who have worked with thousands of families in the same circumstances, and these specialists are available to your for a free telephone consultation at 800.626.4829.
Give us a call today, explore your options, and save yourself countless of hours investigation and research!
School is out, and families nationwide are turning to summer nannies to provide safe, individualized caregiving for their young children over the summer holidays.
Most summer nannies will earn enough over the summer to obligate the family for payroll tax payments and reporting - the so-called "nanny taxes."
HomeWork Solutions is here to help! We will cheerfully prorate our summer nanny payroll or payroll tax-only service fees so you only pay for the services you need. You have a short-term need for services for a short term summer nanny and HWS can make this both easy and affordable.
What you need to know:
- If you pay your summer nanny $1900 or more, you are subject to the "nanny taxes"
- If you privately hired your summer nanny, a nanny background check is a recommended practice
- Workers' Compensation Insurance may be legally required - HWS can help, our preferred vendor will issue this insurance for our clients with no application fee
- Your summer nanny is due a W-2 form in January 2015, be sure you have a permanent address
HWS' nanny payroll specialists are available to answer your questions, provide you guidance, and help you estimate your payroll tax expense and your employee withholding. Best of all, this is a free telephone consultation! Call 800.626.4829 today.
Outsourced summer nanny payroll ... important peace of mind for your family!
Free gift! Download our ABC Nanny Hiring Guide today!
Nannies and other household employees, with limited exceptions, are covered under the Fair Labor Standards Act and must be paid no less than the greater of the Federal or state/local minimun wage.
Effective for work performed July 1, 2014 and forward, you must:
- Pay your California household worker at no less than $9.00 per hour. Note there are higher minimum wage ordances in some cities such as San Francisco ($10.74) and San Jose ($10.00).
- Pay your District of Columbia household worker no less than $9.50 per hour.
Clients who employ foreign household workers in the District of Columbia with a G-5 or A-3 visa must begin paying this higher minimum wage for work performed on July 1 and forward. As of 19 June 2014 the July 1 change to the prevailing local wage has not been published by the US Department of Labor.
To confirm the minimum wage where you live, click here.
The D.C. law firm of Seyfarth Shaw, specializing in Wage & Hour Litigation, reports that Federal lawsuits for unpaid wages and unpaid overtime - know as Wage and Hour Complaints - rose last year to an all time high of 8,126 cases.
This marks the 7th consecutive year that these Federal suits have risen, and they are up 438% since 2000. Richard Alfred, chair of Seyfarth’s Wage & Hour Litigation practice, reports that these numbers "would be even higher if wage and hour lawsuits filed in state courts under state pay practices, data which isn’t readily available, were added.”
For individuals, state wage and hour complaints are typically the first step taken to recover unpaid wages or unpaid overtime. Every state makes these services readily available to individuals, and there are support staff to assist with completing the paperwork and pursuing these matters.
Household employers can protect themselves from costly errors, as well as the embarassment of dealing with a formal complaint, by taking the following simple steps:
- Always have your household employee's compensation IN WRITING and stated in hourly rate terms. HomeWork Solutions' free Hourly Rate Calculator will translate your desired weekly wage to your household worker into the appropriate hourly and overtime rates for you.
- Maintain time and attendance records - either electronically using any number of available smart phone apps, or in paper form using tools such as a week at a glance calendar.
- Always pay for overtime. Families often think they can just offer compensatory time off (comp time) and avoid the extra expense. Don't go there, it is not legal under the FLSA.
HomeWork Solutions' staff is available at any time for a free telephone consultation to help you understand these rules. Give us a call at 800.626.4829. Nanny unpaid overtime complaints have risen noticeably in the last decade, and an ounce of prevention can help you steer clear of this hassle.
The new 2014 Employee Benefit Research Institute survey found that 57 percent of workers have less than $25,000 in total household savings and investments. Two-thirds (68 percent) of those with annual household income of less than $35,000 report less than $1,000 in household savings.
Financial advisors agree that making savings a regular part of your household budget is the surest way to grow a nest egg and have the means to weather a financial emergency or retire in the future. HomeWork Solutions can help your nanny or other household employee automatically deposit part of their weekly or bi-weekly paycheck into a savings or retirement account.
Regular savings, particularly when the deposit is made automatically, allows the nanny or senior caregiver to put the time value of compounding interest to work for her savings. It is true, money does grow! Retirement savings invested in the stock market, which has been a wild ride in the last few years, historically will grow for an average of 8-10% per year. As one gets closer to retirement age, the advice of a good financial planner should be sought to gradually move retirement savings from the more volatile stocks to more conservative savings vehicles - a process known as asset allocation or rebalancing.
If a nanny saves the first $25 of each weekly paycheck over 30 years, she will have a nest egg of $70,000 - $225,000 according to My Daily Finance. HomeWork Solutions makes this easy, and best of all it doesn't cost the employer anything extra.
You can find a ton of financial experts and advise when it comes to retirement and retirement savings. One common theme is TO START NOW. It makes an big difference on how much you will have when you retire if you start sooner.
You may be thinking, this post is not about me. And well, it’s not. It’s about your employee! Your nanny or caregiver is investing in your beloved family members daily. You don't need to get into "their business," simply letting them know that these options exist can make their financial house more secure and their future retirement more comfortable.
The Dr. Phil Show is no stranger to tackling contemporary relationship and mental health issues in a straight forward, no nonsense manner. This week a woman in the audience asked Dr. Phil "When is the right time to take Mom's car keys?"
Naturally Dr. Phil probed for a bit more information. It turns out Mom is in her 80’s, lives on her own and the adult daughter lives almost 1000 miles away. Mom is still driving. Mom is showing classical early signs of dementia. For example, Mom will sometimes forget where she is going and has to turn around. Mom doesn't want to give up driving at all. The daughter also stated that she found out from Mom's neighbor that she was in an accident recently and totaled the car. The daughter was seeking advice on how to approach these difficult questions while maintaining their loving relationship.
Keeping aging parents in their home and safe are critical priorities for adult children and other loved ones. "Aging in place" is the overwhelming desire of the aging adults themselves. Senior living communities are expensive, and with ever lengthing life expectancies making the senior's money last through their last years is an important consideration. This segment hit home for so many of our clients facing these types of issues. In this situation, an in-home caregiver could be the perfect answer to keeping mom safe and having someone be the eyes for the family and for the doctor.
Some common signs that you need to have this conversation now include:
- Failing to follow traffic signals and warnings
- Driving at inappropriate speeds - either too fast or too slow
- Becoming agitated when driving
- Getting lost in familiar surroundings
Dr. Phil's guest, Freda Lewis-Hall, MD FAPA and Chief Medical Officer of Pfizer answered the question beautifully when she said this is a series of conversations to have with your parent, family (and caregiver). It’s not just one conversation. She referenced a Get Healthy, Stay Healthy article, Alzheimer's, Dementia, and Driving, that we believe is a great a resource for caregivers, particularly when deminished mental capacity such as Alzheimer’s and Dementia are in play. She stressed this is not about age and driving, it is about diminished mental capacity and driving. Another excellent resource is the Alzheimer's Association's Safety Center. Dr. Lewis-Hall suggested an appeal to the Mom's sense of responsibility for other drivers on the road might help sway the decision.
Giving up driving is a particularly difficult conversation to have, particularly because this is so closely linked with the aging parent's independence. Alternatives must be considered and at least mentally organzied before you bring up the subject. Senior caregivers, whether hired directly or contracted through an agency, may be an ideal solution, particularly when other family members are not local.
As a last resort, Dr. Phil stated you must either yank the keys or disable the vehicle - allowing your aging loved one to continue driving when they have lost the mental capacities needed for safety is NOT an alternative.
We took a difficult call recently from an adult daughter of an elderly couple who employed two senior caregivers. The Smiths live in New York
Here is the story….
Dad Smith was diagnosed last year with dementia and Mom Smith needed some help around the house and someone to be with Dad when she had to go out. The primary concern was to keep Dad safe at home as long as possible. They hired two senior caregivers to provided needed support. It never occurred to Mom and Dad that they just became employers and with that came specific tax and legal responsibilities (Unemployment taxes, Social Security and Medicare taxes and Workers' Compensation to name a few).
Fast forward 6 months and Dad's health is declining. Moms needs more help. The daughter moves in to help her parents. She was horrified to discover that the two elder caregivers have been stealing from the family. Cash, jewelry, silver and few little things here and there that no one would notice unless you were looking.
The Smiths decide not to press charges and just let the senior caregivers go.
All is good in the Smith's world again. That was until the previous week then they received a letter from the NY Unemployment Office. You see, the two employees who were fired have now filed for unemployment and listed the Smiths as an employers for 6 months. However, the unemployment office had no record of the Smiths having an unemployment account or paying taxes for that 6 month period.
The daughter is going the scheduled hearing next week. She is hoping to be able to explain the situation and that New York State will not assess all of the taxes, penalties and interest that they could.
I had to break it to Ms. Smith that this is only the beginning, because there is more. They owe Social Security and Medicare taxes for the two employees and they should have had a workers' compensation insurance policy (my experience from other clients is the NYS penalties for not having workers' compensation coverage is very heavy handed). Her parent's tax returns for 2013 will need to be amended and W2’s given to the employees. Household employment taxes are complicated, and when you are behind in your filings it can be overwhelming.
Ignorance is so not bliss when it comes to household payroll taxes. My advice to the daugher was, now that you know, we can help you reconstruct that time period together and figure out what the total tax obligations are. It’s better to fix it now than to wait for them to find your parents as interest and penalties will continue to increase over time. NYS is one of 20 states in partnership with the IRS to help identify unpaid/uncollected employment taxes - it is just a matter of time.
Unfortunately, this is not the first client we have helped get out of this awful, stressful situation. But HWS is here and we routinely help our clients get back on track.
Household payroll taxes, it’s what we do. All day, every day. And while this is one of my least favorite situations to help fix, it’s also the most rewarding because I can do the heavy lifting sorting out the tax obligations and dealing with the paperwork, offering these client real solutions.