COVID-19 and the resultant economic disruption caused many household employers to lay off nannies and senior caregivers they had depended on before the pandemic.
Unemployment insurance helps the household employee who lost her income by providing assistance to tide her over until she can get back on her feet with another position.
Household employers have important, time sensitive action items regarding their COVID dismissed household workers unemployment claim.
You have been paying on the books, right?
Congratulations! You have been paying into your state’s unemployment insurance program and your nanny or senior caregiver should have no issues obtaining benefits.
YOU must IMMEDIATELY respond to the questionnaire “Notice of Unemployment Insurance Claim Filed" the state sends out asking about the reason for the employment separation or reduction of work hours. Please do reference COVID-19 or the Coronavirus as the principal reason. You may respond, for example, “Due to COVID-19 our household income has decreased overnight and we can no longer afford our nanny.”
Many states allow responses via a web portal; sadly some of the most impacted states such as New York require you to mail back the responses. Their mail rooms are flooded right now. If you can, scan or take a photo of your response and provide it to your discharged nanny via email or text. Let her know the date you mailed it. Should it not make it to her file promptly, she has ammunition to speed the review process up.
If you do not respond by the date required by the state, your nanny’s claim will be automatically approved, however you may incur fines for not responding.
You have been paying under the table?
Now is the time for damage control! Your US citizen or green card holder nanny or senior caregiver is entitled to and will receive unemployment insurance whether you have paid the taxes or not. Many undocumented nannies, who do not qualify for benefits, will apply anyway and hope they get lucky.
The key point is that the unemployment claim will place your non-compliance under scrutiny – both at the state and federal level. It’s an automatic trigger.
Many families find it is best to get ahead of the damage and get past due taxes (5 quarter minimum - legally you should go back to day one) filed before the state or IRS initiates an audit. It is important to remember that 2019 tax returns are not due until July 15, 2020 – there is still time to get this caught up and avoid costly penalties!
Who pays for the benefits to my former caregiver?
You have already fulfilled your obligation to your former employee's unemployment compensation by contributing your unemployment tax every quarter. Those taxes go into a pool that funds eventual benefits.
What will the claim do to my experience rating?
Your unemployment insurance rate typically adjusts upwards after a significant claim. It’s very much like automobile insurance rates in that respect. However, much like the car insurance on TV, the CARES Act provides “accident forgiveness”!
COVID-related claims will not be included in your experience rating for next year.
HWS is here to help!
All documented workers can and likely will file an unemployment claim. All workers, regardless of immigration status, are entitled to benefits under the FFCRA. Employers who have paid off the books should be aware, either scenario may bring unpaid "nanny taxes" under scrutiny and subject you to collection activities by the state and IRS for back taxes and penalties.
HWS can help you get caught up with your prior tax obligations in advance of collection activities. Use the promotion FREE 2019 to receive your 2019 tax filing services free when you sign up for one year.