New Requirements for California Household Employers
While most media attention in 2011 was focused on AB889 the California Domestic Workers' Bill of Rights, which did not pass in the 2011 legislative session, two other pieces of legislation that household employers must be aware of passed with little notice.
California Wage Theft Protection Act: Mandatory Notice of Pay to CA Employees
Household employers must provide written pay notification to employees at the time of hire, and any time a pay rate change occurs, that includes:
- Hourly and overtime pay rates per hour, as well as any special pay rates.
- The regular pay day.
- The employer's name, physical address, and telephone number.
- The name, address, and policy number of the employer's Workers' Compensation Insurance Carrier.
Additionally, employers are required to provide any notice of change to any of this information within seven days of the change. A sample CA pay rate notice may be downloaded from the 4nannytaxes.com website.
California household employers are now required to provide a pay stub with every payroll which documents the total hours worked, the total gross wages, all deductions, the net pay, as well as employer and employee names, employer address and the last 4 digits of the employee's SSN or tax id number.
Bottom line, California household employers should review their record-keeping systems and ensure that they maintain the required records, including the CA pay rate notice, and any new notices, for at least three years.
Fine for Willful Misclassification of Employees as Independent Contractors
Effective January 1, 2012, a household employer who treats their household employee as an independent contractor (issues a Form 1099 instead of a Form W-2) can be fined between $5,000 and $25,000 per occurrence. The law's definition of "willful misclassification" is any employer avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor. In addition to the fine, employers who are found to have incorrectly classified employees as independent contractors are responsible for paying all taxes not previously withheld, all employer taxes, and any penalties and interest on the unpaid taxes.
We have a discussion on classification of nannies and other household employees at the 4nannytaxes.com website for your review. If you would like to seek legal counsel, we refer CA clients to Bob King, Esq., the founder of Legally Nanny.
RESOURCES:
California Wage Order 15
California Wage Theft Protection Act
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