Efforts at the state level to write and pass legislation to increase the legal rights and protections of domestic service workers - nannies, elder caregivers, housekeepers and others - have increased dramatically in recent months.
California, Oregon, Illinois, and Hawaii all have bills pending today and supporters in Ohio, Massachusetts, Pennsylvania, and Georgia have announced they will be putting bills forward in these states as well this year.
New York passed a Domestic Workers' Bill of Rights in 2010. [Free Download - NY Domestic Workers' Bill of Rights]
HomeWork Solutions has prepared a quick comparison of the various Domestic Workers' bills, along with the bill number and status.
As some or all of these proposals become law, it is clear that families will need the education and support of professionals - payroll professionals like HomeWork Solutions and agency professionals such as International Nanny Association agency members - to clearly navigate these rules with well written work agreements and compensation agreements.
Many families and nannies are surprised to know that household employees already enjoy many labor protections under current law. Curious about how things stand today? Download our free tip sheet Household Employees and the Fair Labor Standards Act.
What are your thoughts? What do you like? What worries you?
HomeWork Solutions is a leading national nanny/household employee payroll and tax company. We work with thousands of families, and hear and respond to the same questions/concerns over and over again. We want to take the opportunity to share this information with you through this easy to follow Q. and A.
Q. Are nannies considered employees or independent contractors? Does it matter how much she earns or how often she works for the family?
A. Nannies are employees. It does not matter if the employer wants to call her an independent contractor, or that she wants to called that. The distinction between employees and contractors is written in law, and hinges on control. The family has the right to control when she works, how the job is performed, and provides the place and tools for the job. It does not matter if the family grants the employee great latitude – they still have the right of control, and that is the central defining element of an employer-employee relationship.
How much the nanny earns only impacts the tax responsibilities of the family, and does not change the relationship.
Q. Why does it matter if you call a nanny an employee or independent contractor?
A. Misclassification of your employee has numerous risks and potential consequences.
- Taxes: When you have an employee, you contribute to Social Security and Medicare programs, as well as unemployment insurance funds. Independent contractors pay higher Social Security and Medicare tax than employees, and are not covered by or contribute to unemployment insurance. If caught, the employer must make back tax payments, including employee FICA taxes that they didn't collect, and pay penalties and interest assessments.
- Insurance: Employers can obtain workers' compensation insurance, important to cover liability in the event of a workplace injury. Independent contractors are not covered by workers' compensation. If there is a workplace injury, and the family is found to have misclassified their employee as an independent contractor, they can be held financially liable for the employee's injury.
- Fair Labor Standards Act (FLSA): Overtime, minimum wage, and time tracking protections apply to employees, not independent contractors.
- Enforcement: Catching misclassification of employees as independent contractors is a workplace enforcement priority. Federal and state governments are anxious to collect unpaid employment taxes, penalty payments, and insure that all employees are paying their income taxes.
Q. If the nanny has a full-time job during the week and babysits for a bunch of different families on weekends, is the nanny an employee or independent contractor for the weekend families?
A. The nanny’s relationship with the weekend families will determine this. If she retains control – sets the pay rate, can say yes or no to the schedule, and can arrange for others to perform the work for her, then that is likely an independent contractor relationship. However, if Family A says they need her every Saturday from 6 PM until midnight, and only she can provide the services then this indicates an employer-employee relationship. Again, control is the central determining factor. The Internal Revenue Service's Form SS-8 is used to get an official determination of worker status.
Q. If the nanny makes her living doing babysitting and temp jobs is she an employee or independent contractor?
A. Whether a job is full time, part time, or temporary does not matter at all when making the determination of employee vs. contractor. Control is the central matter. Frankly, it is very hard for a nanny or the parents to make the case that the family does not have the right of control – what and when to feed the children, approved and disapproved activities, schedule, etc. In the vast majority of circumstances an employee-employer relationship exists. Certain specialties – especially newborn care and doula services – are easier to define as a contractor relationship. After all these care specialists are engaged to interact with the family in a very different way than a temp nanny interacts with a family. The NCS or doula typically will set the rate of compensation, may engage other individuals to help provide the desired services, and exercises considerable control over the scope and nature of the provided services.
Remember, how much the employee earns only impacts the tax responsibilities of the employer, and does not change the relationship.
Q. If the nanny works for an agency temping while she looks for a full-time job, is she an employee or independent contractor?
A. If the agency pays her, she is an employee of the agency. If the family pays her directly and pays the agency a daily or hourly fee for arranging the schedule/booking of the nanny to provide the services, she is an employee of the family.
Q. What the difference between a W-2 and a 1099?
A. W-2 Wage and Tax Statement is provided to employees. It will summarize the wages paid and taxes withheld from the wage. A nanny who receives a W-2 knows that the family is paying their portion of the Social Security and Medicare taxes, as well as unemployment taxes and workers compensation insurance.
1099 MISC is used typically by a business or family to document fees paid to an independent contractor. This independent contractor is responsible for self employment tax – essentially the employer and employee portions of Social Security and Medicare taxes. When a nanny employer provides the nanny a 1099 form, they are pushing their tax obligations over to the nanny. Not only is this not proper, but the IRS is cracking down on all businesses or families who issue 1099 forms, looking closely at the relationship between the parties (family and nanny in this circumstance) and prosecuting businesses and families who should have been issuing a W-2 form to the worker. This is an enforcement priority of the Obama Administration, and 22 states are working hand-in-hand with the IRS to do these examinations. States are interested because unemployment funds are severely depleted, and families who issue a 1099 are not paying their fair share of unemployment taxes.
HomeWork Solutions hopes you find this helpful … stay tuned for more upcoming discussions of common questions household employers and employees have.
Today is the day we celebrate FAMILIES around the globe. What does the word family means? According to Wikipedia “In human context, a family (from Latin: familia) is a group of people affiliated by consanguinity, affinity, or co-residence. In most societies it is the principal institution for the socialization of children.”
Think about “An institution for the socialization of children”. How important is this? Children are our future. As a company, we hear how families struggle with the care of their children and aging or disabled family members on a daily basis. Parents and adult children worry, struggling to locate a loving and caring person, and to insure their loved ones safety. They know the importance of finding a competent and caring person to take care of their loved ones while they have to go to work.
Nannies and Senior Caregivers are often the most ideal solution! These special people specialize in the care, protection and companionship of our loved ones in our family home. These caregiving professions are clearly important for our society and its development. These loving and caring individuals whom we trust our kids and elders are not only our employees; they become, with time, integrated members of our family.
Family is not only those whom we are related by consanguinity; family is also the people we care for and who care for us. We have received so many phone calls from clients letting their nanny or caregiver go because the family needs have changed and the service is no longer needed. There is so often genuine sadness on their part to be severing this relationship. Many families (those who can afford this option) will actually evolve their nanny’s job to that of a Household Manager just to keep her around.
HomeWork Solutions celebrates today (and everyday!) all of our client families and those considered as family. We want to say Thank You to all care providers for all you do and for the valuable support you add to our community and the success of our families around the US!
It is an important day at HomeWork Solutions; we celebrate today as the family we are ourselves!
The HomeWork Solutions Family
SPECIAL GUEST POST
When you consider hiring an in-home caregiver, you are allowing a complete stranger access to all that you hold dear. You are opening your world up wider than a Facebook page ever could. Because you are letting someone into your private life, you want to make sure they are who they claim to be. Performing a background screening of a potential caregiver can help reduce the risk to yourself, your child, and your home.
1. Honesty - Comparing a potential employee's answers with items found on a background screening could determine if your candidate is honest or not. Someone who is willing to hide his or her past is willing to hide anything in order to keep a job. You need someone that will not only be safe for the environment, but will be honest if something happens to your child.
2. Abilities - A resume and an application can only cover so much data. There could be underlying skills that are beneficial that the candidate may not have considered. On the other hand, a background check can also provide verification of skills the candidate may claim to have. If someone claims to have knowledge of first aid or CPR, you want to make sure that it can be verified.
3. Criminal Report - An individual's past criminal activity doesn't necessarily mean that they are going to be a bad nanny. There are many aspects of these reports that you'll need to scrutinize with your candidate. Some circumstances have logical explanations and many others would have no impact on how he or she behaves as a nanny. As nobody is perfect, getting to know the candidate's side of the story can help remove any doubts.
4. Deeper than References - When a potential candidate lists references, it is obvious that they are going to choose those who would give him or her a positive review. If there is an individual who had a negative experience with your candidate, you need to know that too. Other employment positions and landlords can provide insight to the behavior of your candidate. Were they evicted because of property destruction? Did they get fired for substance abuse? These questions and more can be answered by talking to those within the candidate's history.
5. Thoroughness Can Comfort - As you are putting the life and well-being of your child in the hands of a stranger, you need to be comforted that you have done everything to ensure his or her safety. Some people have a demeanor that seems pleasant and responsible on the surface. It's next to impossible to know for absolute certainty of a person's nature from just one or two meetings with them. Knowing everything you can about your prospective employee can put your mind at ease when you're away from the home.
Performing a background check on someone who will be within your home should be one of the first things that cross your mind as soon as you decide to hire an in-house caregiver. While there is still a risk when hiring anyone for any kind of task, screening a background can give you insights as to what to expect. Your child's welfare should be worth the amount of money it costs in order to complete one of these checks.
Jack Meyers is a regular contributor for www.nannybackgroundcheck.com. As a detective he wants to spread the knowledge of terrible risks involved when people don’t fully verify the credentials of a caregiver or any employee. He also writes for various law enforcement blogs and sites.
We live over whelmed by the Disney-style images of an idealized life, where love stories end when the couple gets married and they “live happily ever after”. Have you ever questioned what “ever after” really means? Let me tell you … it means we buy a house, pay bills, and have arguments over the remote control. Eventually, we become parents, and time seems to start running against us!
We are living in the REAL world! Not surprisingly, it has nothing to do with that fantasy one of princess movies or TV commercials. We find ourselves running around between work, our home and swimming lessons. This real world is complicated; but also wonderful in its own unique way. As a working mom and wife, this world is the best thing that ever happened to me, personally. The craziness of MOTHERHOOD is, of course, included in this wonderful definition of my world.
Motherhood gets more and more complicated over time. Mothers are fighting to balance their career, their kid’s homework, activities and quality time with them all the time. This is OUR world and it is a great one! At the end of a very long and challenging day, what matters the most is that wonderful-true-love-good-night-kiss from our child, exhausted after a very long day.
At HomeWork Solutions we have real moms, as clients, employees and partners. We want to take a moment to wish them a wonderful Mother’s Day … this Sunday and every day. We appreciate all you do! Moms, if you are a HomeWork Solutions client, we even have a small gift for you today. Log into your HomeWork Solutions’ account, and you can download a complimentary copy of the popular e-book RELILIENCE: Raising Kids Who Launch!
Happy Mother’s Day to all our real moms out there!
Vanessa Vidal, FPC and the HomeWork Solutions Family
Whether it be the vacation rental at the beach, a resort vacation, a trip or a cruise, many families find vacation more restful and enjoyable when they bring their nanny along to help.
Traveling with your nanny can be expensive, and there are some "rules for the road" to be considered when evaluating this option:
- Nanny travel expenses are the family's responsibilities, including meals during the holiday. If you will not be eating together as a family, a reasonable daily meal stipend should be arranged.
- Nanny is working and her hours and duties should be planned and discussed prior to making arrangements. Clear communication and expectations are a must. Often parents and the nanny are working side by side, and this is a big consideration. Chances are your nanny is accustomed to considerable authority and autonomy when working with your children and this is a big adjustment for all parties.
- Payday should not be interrupted, and if you are using nanny for additional hours or days they must be compensated.
- Privacy should be arranged - nanny should have her own room to go to when not working.
- Time off should be arranged, and scheduled, in the trip planning phase. Your nanny should have some time to herself to explore the area without the children.
- Recognition is important - your nanny may be spending a week or more in a gorgeous locale, but she is still working and away from her own home. Chances are her work schedule has been flexed to allow the parents time alone, and children find it hard to keep to their schedules when away from home. This shouldn't be a financial sacrifice for her - if she has to arrange pet care of her own, for example, it would be considerate to cover this. And of course "Thank you!" goes a long way.
Aging adults increasingly want to remain independent and age in their own home. Grandma or grandpa are really happy living at home and don't want to move out. Their family and loved ones worry, however, because they are not able to completely take care of themselves on their own. It is time to objectively assess the senior's abilities and limitations, and to develop a future care plan that helps them to safely age in place.
Fortunately, this scenario is so common-place that an entire profession - Geriatric Care Management - has evolved to help the family with these difficult decisions, and to present to Grandma and the family services and options that will allow Grandma to safely stay in her home, meeting her needs and the concerns of the family and other loved ones for her safety. These group of professionals dedicated to the care of older people or disabled adults are called Geriatric Care Managers.
The Geriatric Care Manager (GCM) is a care coordinator, educated and experienced in any of several fields related to senior care management, including, but not limited to nursing, gerontology, social work, or psychology, with a specialized focus on issues related to aging and elder care. The GCM will help the family plan and coordinate care of their elderly family members, helping the senior safely remain independent for as long as practical.
Grandma's care is now covered. The family found a Geriatric Care Manager who recommended the family engage a senior caregiver to come in daily to provide companionship and help with homemaking activities such as meal preparation, laundry, and driving Grandma to the grocery store, pharmacy, medical appointments and social activities. The family assessed services provided by seniorcare staffing agencies, but ultimately hired a woman known to them through their church to take care of Grandma and allow her to maintain, to the extent possible, her independence in her own home. This is not the end of the story... it is actually the begining of the "Nanny Tax" field - our area of expertise.
HomeWork Solutions is a payroll and tax services firm that specializes on Household Employment taxes - only. When a family privately hires a senior caregiver and pays her $1800 gross or more in a calendar year, they become responsible for household employment taxes. We work with families nationwide, providing either full payroll or simply payroll tax preparation only services. We simplify payroll tax compliance, freeing the family to focus their care and attention on Grandma.
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Currently, New York is the only state with a Domestic Workers’ Bill of Rights. However, legislative activity is occurring at the state level that could impact HomeWork Solutions’ clients in other jurisdictions as well.
California: This state’s Domestic Workers’ Bill of Rights, reintroduced as AB 241 by Assembly Member Tom Ammiano, was passed out of the Labor Committee last week and is being considered by the state’s Appropriations Committee. This bill passed the California legislature in 2012 and was vetoed by Governor Brown, citing concerns for the impact on the state’s budget (state paid home health aides were covered by the bill) and the possible negative consequences to private household employers. AB 241 would require mandatory off duty meal breaks and rest periods for domestic service workers, including nannies and senior caregivers, provide mandatory paid time off, and extend overtime protections beyond those outlined in California Wage Order 15.
Illinois: The Illinois Domestic Workers' Bill of Rights Act, SB 1708, would extend minimum wage and overtime protections for domestic service workers, require a written contract between the worker and employer, require off duty meal breaks, and paid time off. The bill would NOT cover personal care attendants and personal assistants working under the state-paid Home Services Program.
Domestic Workers' Rights advocates are also working with state legislative representatives to introduce similar bills in Massachusetts and Hawaii.
Significantly, the new legislative proposals in California and Illinois expand on the New York legislation they are modeled after. New York does not require the off duty meal breaks that are so problematic in the California and Illinois proposals, and only applies to domestic service workers employed directly by a private household.
HomeWork Solutions will continue to track the various legislative activities for clients. Should proposed legislation become law, we will post information for clients on necessary compliance activities.
We know, you just finished your annual tax filings and you would really prefer to tune out! This, however, is good news we want to remind you about.
The Small Business Health Care Tax Credit, which covers 2010 - 2013, applies to household employers too!
IF you provide health insurance for your household employees (nanny, housekeeper, senior caregiver) AND you:
- Employ 25 or fewer full time employees (or full time equivalents)
- Wages average less than $50,000 per employee annually
- Provide health insurance and pay at least 50% of the employee’s single-rate premium
You may be eligible for the Small Business Health Care Tax Credit. Household employers may not deduct employee health insurance premiums from their income taxes the way other business employers can, making this the only tax reduction option available to the household employer.
The household employer needs to be aware of some "fine print." For example you must pay the employee's insurance premium directly to the health insurer - you cannot give this money to your nanny or housekeeper to pay themselves.
Employer provided health insurance benefits remain non-taxable compensation, exempt from employer FICA and unemployment taxes, and exempt from employee FICA and income taxes.
Here is an example of the Small Business Health Care Tax Credit:
The Smith family employs one nanny who earns $25,000 per year. They pay $250 monthly for a qualified health insurance plan ($3000/year). The Smith family qualifies for a maximum credit of 35% of the premium, or $1,050.
The maximum credit can be reduced by several factors, including when average annual wages exceed $25,000 and in situations where your state offers either a tax credit or premium subsidy to household employers who offer health insurance to their employees. To claim the credit, the Smiths must include IRS Form 8941 with their annual income tax return.
Many families that hire a senior or elder caregiver to care for a loved one want to document the arrangement so that all parties - the senior caregiver, the supervising family member, other family members and the senior receiving the care - all understand the terms and scope of the employment agreement. This is a best practice at all times! You will want this document to restate the terms of employment, including hours and wages, and to memoralize the items you originally agreed upon with the caregiver. So what do you need to include in this senior caregiver work agreement?
- The name, address and Social Security Number of the caregiver (you need this for payroll tax reporting later) and the name and address of the employer. The employer will be the financially responsible party, either the senior receiving the care if his/her funds are used, or the responsible relative if they are funding the care.
- The days and hours the caregiver is scheduled to work.
- The compensation agreement, to include an hourly pay rate, the frequency of payroll (weekly or biweekly are most common), and a guaranteed weekly base if applicable.
- Payroll tax agreement. You must at a minimum report and pay to the Internal Revenue Service the Social Security and Medicare taxes (FICA taxes). You will either deduct the caregiver's portion from their pay or agree to pay it in addition to their hourly pay. Make sure you are clear in the agreement on how you are handling this. You may choose to deduct income taxes, or state that the caregiver will pay their own income taxes.
- Paid time off, to include vacation time, sick time, and what holidays are paid. In most areas this is not legally required but it is commonly expected, especially with full time caregivers.
- Your policy for notice of unplanned absences and an inclement weather policy.
- A termination agreement, including notice or pay in lieu of notice agreement.
- Specific duties and responsibilities.
- Expense reimbursement - typically mileage reimbursement if the caregiver uses their personal vehicle to drive the senior to appointments or shopping, or reimbursement for incidentals such as groceries. You can and should require detailed receipts and documentation.
- House rules, including household security, approved use of household property such as wifi or computers, social media policy (you may wish to restrict the caregiver from posting photos or details about whom they work for or where).
- Prohibitions (Smoking, alcohol, off limits areas in the home, abusive language or behavior, theft, not calling ahead if unavailable, eating your food, parts of the house that are off limits, etc.)
- Emergency procedures - who to contact, how and in what order.
- A confidentiality agreement.
- A return of family property agreement - this may be household keys, remote door openers, or a walker or wheel chair the caregiver keeps in the trunk of their car.
Details matter - don't be afraid of including too much. Both the caregiver and the employer should sign the agreement, and a minimum of two copies made, one for the caregiver and one for the employer. Additional copies may be wise if you want the agreement to be clear to other family members.