Most nannies and their employers work and are paid on a set weekly schedule; however, from time to time the family will require additional hours from their nanny. Legally, nannies are entitled to additional compensation for additional hours worked, and live out nannies, at a minimum, are entitled to the overtime differential (1.5 times the hourly rate) for hours worked over 40 in a work week. *
In New York, Domestic Workers United (an in-home caregivers advocacy group) recently established a help line for nannies, housekeepers, and their employers to explain New York's labor laws surrounding overtime for household employees. In California, affiliated worker advocacy groups have been actively organizing and educating their constituencies about California labor laws for in-home caregivers.
Many employers, accustomed to being exempt, salaried workers professionally, neglect to pay their nanny or housekeeper accrued overtime. This is a risky proposition for the family. The convergence of Federal and State wage and hour enforcement efforts (an Obama administration priority), and the well organized educational outreach efforts of DWU and it's affiliates, raise the risk to the household employer that a disgruntled employee will file a Wage and Hour grievance. The consequences include awards of back pay, penalties, interest and attorney's fees.
Families are advised to side step these risks and follow best practices that include:
- Have a written compensation agreement with their household employees that includes wages stated in hourly rate terms.
- Maintain accurate and contemporaneous time tracking records.
- Track and include overtime hours in the periodic payroll.
- Provide the employee with documentation of the periodic payroll calculation, including weekly hours worked, hours paid at the regular rate, hours paid at the overtime rate as well as applicable tax deductions. This is legally required in some circumstances!
HWS clients who have any questions about their employee's payroll and time tracking are invited to call their representative to discuss their specific circumstances and best practices.
* Many states have customized overtime payment schemes - know your state's rules or call your HWS account representative to discuss your situation.
~~~~~~~~~~~~~
Guest blogger Bonnie Low-Kramen is the author the book, Be the Ultimate Assistant, A celebrity assistant’s secrets to working with any high powered employer. Bonnie is the former assistant to celebrity couple Olympia Dukakis and Louis Zorich. Bonnie is now teaching workshops for Personal Assistants in major U.S. cities. Visit www.bonnielowkramen.com for more details.
Be kind to people on the way up- you’ll meet them again on your way down. – Jimmy Durante
It was recently reported in USA Today that 48 percent of employees believe that being courteous leads to advancement at work. And in a recent AOL article, business writer David Schepp writes, “with five applicants for every job opening in the current labor market, it’s not surprising that employers have focused more on employees’ soft skills. After all, in trying times, such as those experienced during the recent recession—being able to handle stress with aplomb can go a long way toward maintaining harmony in the workplace.”
These statistics speak to what we all value in a work environment – respect and appreciation. What manager or CEO doesn’t want a healthier and more functional relationship with their staff? These four steps can make a positive difference in your household organization and build morale, especially in today’s highly pressured workplace.
- Getting to know you. How well do you know your staff? Taking the time to sit down one-on-one with your staff can build bridges and respect that transcends titles. When you understand what makes them tick and they get to know you; you are sending signals that you are interested in them as a person, not just the job they perform. Make it a practice to know birthdays and other important events in the life of your staff. Even if you can’t offer a monetary incentive, a few hours off to attend a special family event or a child’s baseball game might even be better. Take the time to find out who is on your team and why.
- Listen up. Your staff is an invaluable resource. The benefits in building relationships with your staff are numerous. Your staff serves everyone well as the face and voice of your household organization, the first point of contact with family and clients, and can trouble-shoot many problems before they ever reach you. The hallmark of your leadership is found not when you ignore your staff but when you respect them as the valuable team players they are. Engage your team by frequently asking, “What do you think?” and encourage honest response. Discuss your decisions. Staffers who have a voice feel ownership and strongly connected to the successes of their principals. Reward this kind of initiative and the benefits will come right back to you.
- The value of undivided attention. In a time of text messages, smartphone emails, custom ringtones, and 24/7 accessibility, the concept of giving another person one’s undivided attention has become a rare commodity. Ten minutes might be all your staffer needs with you to get the answers he needs in order to get the ball rolling on a myriad of projects. Author Jim Rohn said, “Give whatever you are doing and whoever you are with the gift of your attention.” What a great piece of advice. Look your staff in the eye while speaking to them and try to avoid answering with email or texts when possible. The smart managers know how to multitask and seek out face time as a team building tool.
- High praise. It’s a fact- sincere praise motivates staff to produce excellent work far more than humiliation, intimidation, and yelling. Praise is powerful in every form – written and verbal. To publically praise a staffer inspires every team member to seek excellence in order to garner similar praise. John Maxwell said, “The disposition of the leader is important because it will influence the way the followers think and feel. Great leaders understand that the right attitude will set the right atmosphere, which enables the right responses from others.” Sharing the credit and spotlight elevates the whole team. The rise in your leadership begins when you take the spotlight off yourself and place it on your team. When you sing their praises be assured, they will sing yours. Becoming the ultimate manager is possible but it takes hard work and careful choices based on respect and appreciation for the staff.
Worker misclassification - the practice by an employer of treating an employee as an independent contractor for purposes of avoiding employment taxes - is a constant issue in the field of household employment. Many household employers - and employees - simply feel this is easier, that the tax forms are too complicated, or the tax expense too high.
The Obama Department of Labor (US DOL) began enforcement in the areas of worker missclassification in 2010. In 2011 the US DOL, the Internal Revenue Service, 11 states and one territory entered into a Memorandum of Underderstanding (MOU) for the purpose of information sharing between the federal agencies and their state counterparts to help identify employee misclassification, and pursue administrative and legal action against the employers. In 2012 California signed the MOU as the 12th state.
Maine signed into law April 18, 2012 H.B.960, "Act To Standardize the Definition of "Independent Contractor." In the Maine statue, "An employer that intentionally or knowingly misclassifies an employee as an independent contractor commits a civil violation for which a fine of not less than $2,000 and not more than $10,000 per violation may be adjudged." This is in addition to assessments for back taxes, penalties and interest.
The Maine law closely mirrors Federal language, simply stating that "Services performed by an individual for remuneration are considered to be employment ... unless it is shown to the satisfaction of the bureau that the individual is free from the essential direction and control of the employing unit..." It goes on to state that an independent contractor controls the means and process of the work (how the work is done), is customarily engaged in an independently established business, has opportunity for profit or loss, pays for their own assistants or sub-contractors, and has an investment in the tools of the trade.
Under U.S. common law, a worker who performs services for you is your employee if you can control what will be done and how it will be done. It does not matter whether you give your household employee great latitude or that the employee has occupational or professional training for his/her position, but simply that you have the right to control the work. It does not matter if the work is performed on a full time or part time basis. It does not matter whether the worker lives with you or not. It does not matter if he/she is paid hourly, daily or a salary. It does not matter how the employee refers to herself or how you refer to him/her in an employment contract. The household worker is your employee and you are generally obligated for all payroll tax filings and remittances.
The actions being taken at both the Federal and state levels to correct worker misclassification are the most coordinated and aggressive we have seen in our twenty years in the household payroll arena. Tax collection activities always step up when there are revenue shortfalls, and shortfalls in the unemployment compensation funds at both the state and federal levels are at historic highs. The Commonwealth of Virginia recently mailed out letters with questionaires to thousands of entities (businesses and households alike) that they identified, with the help of IRS data, as possibly misclassifying employees.
HomeWork Solutions provides payroll and payroll tax services specifically to household employers. We are recognized experts in the field with 20 years of experience, helping households nationally. If you would like to discuss your situation, call 800.626.4829 for a free consultation with one of our household employer consultants.
~~~~~~~~~~~~~~~
The US Treasury's Internal Revenue Service (IRS) advises that G and A visa holders temporarily present in the United States as a foreign government related individual are non-residents for income tax purposes, no matter how long they have resided in the United States.
The US Department of State in a Diplomatic Note dated March 27, 2012 advises:
Why is this important? G-5 and A-3 domestic servants, admitted to the United States to work for staff members of international organizations and missions, must pay US income taxes on their wages. The G-5 or A-3 domestic may be required to file and pay US income taxes using either Form 1040NR or Form 1040NR-EZ. Forms 1040 and 1040-EZ may not be considered proper filings. Failure to properly report and pay US income taxes will cause the application for visa renewal or visa extension to be denied by the US State Department.
G-4 and A-1 sponsors of the G-5/A-3 domestic servant is, under US law, a withholding agent when the sponsor pays to a non-resident alien income subject to US income taxation. As a withholding agent, the sponsor is personally liable for any tax required to be withheld. This liability is independent of the tax liability of the foreign person to whom the payment is made. If the sponsor fails to withhold and the foreign payee fails to satisfy its U.S. tax liability, then both the sponsor and the foreign person are liable for tax, as well as interest and any applicable penalties. It is a best practice for the G-4 or A-1 sponsor of a domestic servant to withhold US income taxes from the G or A visa holder they employ.
As a general rule, withholding using a status of Single with zero exemptions will closely approximate the amount of US income taxes the non-resident will owe at year end. Withholding calculations are approximate - actual tax due is calculated on the actual tax return.
More Information:
IRS Publication 519
IRS Publication 515
~~~~~~~~~~~~~~~~~~~~
We recently posted some advice on how to choose a quality nanny referral agency. We work with agency partners nationwide to help their clients and referred private service professionals alike understand the mechanics of household payroll. Nannies from the Heartland Inc. is a well respected household staffing agency in Minneapolis, MN. Becky Kavanagh, an experienced placement counselor (with 22 years of nanny experience!) shares some of her thoughts on how parents can stay connected to their child's day.
~~~~~~~~~~~~~~~
Having your nanny keep a journal about each day's activities, the foods eaten, child's mood and other important information is a great idea. I had a journal for each child in my care. When they were young - infant through early preschool age - I wrote in it each day. As they got older the journal became less formal. The children actually used their journal in a school project at one time or another - they loved reading through them!
Touching base with your nanny throughout the day by phone call is a good idea. Some nannies may think of this as a “check up” call and fear that you don’t trust them. Explain to the nanny that the call will help you to feel in touch with your child, that you simply miss not being there yourself. I appreciated the phone check-in from my employer. It gave me a chance to share some of the highlights of the day and frankly, talk to another adult. I also appreciated knowing I could call them and talk or leave a message if I had any questions. When I started the mother or dad would call at least once a day just to see how it was going. As time went by those calls were more infrequent because we had built our relationship and trust with each other.
We took time, however brief, at the end of most days to touch base. It was a great way to share and feel connected. Scheduling regular meetings at the end of the week or another time that works for everyone is a great idea. You can talk about details in a more relaxed setting. We talked about what was going well, ideas we had, along with setting goals for the future. They asked me about my personal life and interests which made me feel connected with them. I can tell you from experience that connecting on a deeper level is important for the strong relationship you are building with your nanny.
~~~~~~~~~~~~~~~~~~~
The Internal Revenue Service (IRS) and 11 states, as we reported in October 2011, have entered into information sharing agreements for purposes of employment tax enforcement. Virginia, apparently, is making a concerted effort to collect state unemployment taxes from employers known to the IRS, but not to the state.
We received dozens of these letters in our office in the last week. For these employers, it is a simple matter of helping the state match of the Federal Employer Identification number with the state's unemployment tax account. For those employers who are not properly reporting wages and taxes to the govenrment, it is a much more complicated affair.
Historically, employment tax enforcement efforts step up when tax revenues do not meet current obligations. Two thirds of the states have been forced to take loans from the Federal government to meet unemployment benefit obligations. Twenty states are in arrears in their loan repayment and next year that number is expected to rise. The 2011 information sharing agreement between the IRS and the states' departments of labor and revenue is unprecedented.
If you want to learn more about household employment taxes and your family's obligations, visit our Frequently Asked Questions or download the free e-book below. HomeWork Solutions works with thousands of families nationwide - we Simplify the Nanny Tax.
~~~~~~~~~~~~~~~
Reprinted with permission from First Class Care, Inc., a nationally recognized nanny referral agency in Chicago, IL, and a host of the Chicago-area National Nanny Training Day event. HomeWork Solutions is proud to support this event.
~~~~~~~~~~~~~~~~~~~
National Nanny Training Day is an initiative created by Nanny Biz Reviews to promote awareness of the important connection between nanny training and quality of care. On Saturday, April 28th over 1,000 nannies in more than 30 cities across the country will gather in their local communities at training events designed to meet their unique needs. First Class Care, Inc. is proud to be the local sponsor for the Chicago event. We’re planning a full day of hot topics, top presenters and great networking, all in a fun, relaxed atmosphere.
Please consider covering the cost of this event for your nanny. It’s only $49 for 6 sessions, lunch, raffle prizes and a great goodie bag. It’s a small investment with a big payoff. Study after study shows that nannies who receive training consistently provide higher quality care.
(NOTE: For a complete listing of events planned nationally, see NannyBizReviews.com)
# 10: Your nanny has cared for older kids, but now that you are having a baby she’ll need additional tips to care for your newborn.
# 9: The event will offer “learn today, use tomorrow” sessions that will give your nanny new strategies and solutions to challenging behaviors and ages and stages transitions.
# 8: Your nanny is new to the area and this is the perfect way for her to meet other nannies, make friends and even set up play dates.
# 7: It will help keep her excited about her job. Connecting with other like-minded caregivers, learning new ways of doing things, being appreciated for the great work she does all lead to a renewed sense of enthusiasm and commitment.
# 6: Where else can you find such a variety of professional training in one day for such a great price?
# 5: Your nanny will learn about the latest research, explore new approaches and techniques, and develop new caregiving skills: things that will make her a more confident and successful caregiver.
# 4: No matter how many years of experience she has your nanny can always learn something new.
# 3: You understand—and respect—your nanny’s need to freshen up on skills and continue her education.
# 2: Everyone benefits from continuing education.
# 1: You value your nanny and want her to be the best she can be.
~~~~~~~~~~~~~~~~~~~~~
HomeWork Solutions' Kathleen Webb will be joining a wonderful panel coordinated by New York's Park Slope Parents that will help to step parents through the nanny hiring process. Follow the link for registration information and details.
Ms. Webb will be sharing information on the payroll and tax issues New York household employers face, as well as some information on the New York Domestic Workers Bill of Rights.
HomeWork Solutions has a special tip sheet available for free download regarding New York household employer responsibilities. Overlooking your payroll, employment tax and insurance obligations can be risky business.
~~~~~~~~~~~~~~~~~~~~
The U.S. Department of Labor announced in December a proposed rule change that would extend minimum wage and overtime protections to cover elder care workers who currently fall under the companion exemption in the Fair Labor Standards Act. The DOL extended the comment period on its proposed rule to extend minimum wage and overtime protections to elder care workers to March 21. Originally the comment period was scheduled to close on Feb. 27. This is the second extension.
The FLSA's companionship exemption as defined in 1974 exempts in-home care givers who provide care and fellowship services to the elderly from both minimum wage and overtime rules. Currently, employers are not legally required under Federal law to pay home care workers either minimum wage or overtime. This is the case whether they are employed by a family directly, or employed by a third party home care staffing agency. The proposed rule would amend the companionship exemption in two substantial ways. First, the definition of the types of work that a companion may perform will be strictly limited to companionship, and a companion can do no incidental household work or light housekeeping. Secondly, the proposed regulations specifically limit the exemption to individuals employed directly by the individual or family. Home care workers employed by third parties would not qualify under the proposal for the companionship exemption.
~~~~~~~~~~~~~~~~~~
HomeWork Solutions proudly offers active duty military personnel complimentary service enrollment, a $100 value. To receive this discount, new clients must provide a valid .mil email address and enter MILITARY DISCOUNT as the referral code in our online service enrollment.
Service enrollment includes:
- Application for Federal Employer Identification Number.
- Application for state unemployment tax account.
- Application for state withholding tax account, when applicable.
- Consultation to work through details of employee withholding and employer budget.
- Accurately calculate employee payroll withholding and net check amount.
- Prepare and file New Hire Report.
Would you like to learn more? We welcome inquiries and always offer a complimentary telephone consultation. Just call 800.626.4829 and ask to speak to an enrollment specialist. We thank you for your service.
~~~~~~~~~~~~~~~~~~~~