US Senator Sherrod Brown (D-OH) has introduced S.770 - Payroll Fraud Prevention Act. The bill would amend the Fair Labor Standards Act of 1938 (FLSA) to ensure that employees are not misclassified as non-employees, and impose substantial penalties on employers who are found to have classified bona fide employees as independent contractors for purposes of avoiding payroll taxes. The bill is referred to the Senate's Committee on Health, Education, Labor, and Pensions.

Topics: nanny hourly wage, nanny non-exempt employee, nanny overtime, nanny independent contractor

Infant day care slots are in short supply, and when available they are very expensive. Here in greater Washington DC it is common to pay $2000 a month or more for infant day care.

Topics: nanny share

Summer is coming. I count the days until I can wear flip flops, have some daylight at the end of my work day, and am already day dreaming about a summer vacation. Most of us anticipate summer.  Many nannies, however, dread the coming summer months. Why?

Topics: nanny summer schedule, nanny paid time off, nanny work agreement, nanny vacation

Note: Special thanks to our guest blogger, Bob King, for his discussion below on nanny employment termination and the return of family property.  Bob is an attorney and founder of Legally Nanny, the leading law firm providing legal and tax advice to household employers.

Topics: nanny return of family property, nanny employment termination, nanny separation

Many families (and agencies) use nanny work agreements that cover a specific period of time, generally one year. This is NOT a good idea. In a complicated United States District Court, D. Oregon case, the court affirmed that nannies are indeed non-exempt employees and are entitled to hourly pay and overtime pay for hours worked in excess of 40 in a work week.  

Topics: nanny employee, nanny non-exempt employee

Nannies and senior home-care workers are not independent contractors.

 “Most workers [who are classified as independent contractors] are employees under the FLSA’s broad definitions.” ~ David Weil, Administrator, US Department of Labor Wage and Hour

 

Nannies and senior home caregivers are almost always employees of the hiring family, yet every year thousands of families classify their nanny or senior caregiver as an "independent contractor" and fail to pay the employment taxes and unemployment taxes on the wage they pay their family's nanny.The IRS estimates that fewer than one in five famlies with a household employee comply with the payroll, tax, and reporting requirements in the tax code. Industry experts place the compliance rate much lower than 20%, and have calculated a $3 BILLION dollar per year tax gap - the taxes owed but not collected on household senior homecare and nanny employment.

Topics: worker misclassification independent contractor, nanny employee, nanny independent contractor

Topics: nanny income tax

 

The Department of Homeland Security's Citizenship and Immigration Services will launch an individual self-check capability in the E-Verify program in 2010. This will allow workers to verify their own work authorization status before they apply for a job. E-Verify is the federal government's mostly voluntary electronic employment verification program. E-Verify will confirm I-9 data provided to the employer by matching information to government databases.

E-Verify currently allows employees who cannot be electronically verified 8 business days to appeal/correct the information and continue working. "Tentative nonconfirmations in the E-Verify program may be difficult for an employee to address in the eight business days" allotted under the program, said Alejandro Mayorkas, CIS director. With a self-check option, workers could correct errors before they apply for a job and without the eight-day constraint, he said.

HomeWork Solutions, the nation's leading preparer of nanny payroll and provider of nanny tax compliance services, began offering E-Verify to clients in the summer of 2008. Clients who verify their employees employment via E-Verify are provided "safe harbor" - immunity for any government penalties - in the event the employee is later deemed ineligible for employment in the US.

 

E-Verify Self Check Link

Topics: nanny e-verify

In today's economy nannies are finding that good jobs take longer to secure. The household who let's their off-the-books nanny go, for whatever reason, should be seriously concerned about their former nanny filing an unemployment claim. The nanny who was perfectly content to receive tax fee income experiences a reality check when they have no income for weeks, or months. Suddenly, filing an unemployment claim seems the only option to avoid eviction or to put food on the table. Once that claim has been filed, the whistle is blown on the former household employer. Since state unemployment systems share this information with the IRS, everyone is on notice that the family employed the nanny and that there are no tax returns on file.

Topics: nanny tax audit

The IRS's 2010 budget request includes an increase of approximately $300 million above its 2009 appropriations for enforcement. Conventional wisdom says that IRS compliance activities recoup $5 for every $1 spent. Historically, IRS enforcement efforts step up in times of budgetary crisis. The efforts target closing the "tax gap" - the difference between taxes owed and taxes paid. The "nanny tax gap" is estimated to be more than $5 billion per year and possibly as much as $20B.

Topics: payroll tax enforcement