Unemployment Claims for Household Employees During COVID-19

The worldwide COVID-19 pandemic has caused unprecedented job loss and disruption to the economy. Household workers are some of the most economically vulnerable workers, as they live paycheck to paycheck in many instances. While some highly qualified nannies are landing on their feet as their college education provides a good baseline to help with home schooling, other wonderful caregivers with less educational experience find themselves out of work with no immediate prospects.

Clients continue to ask questions about unemployment benefits for their discharged nannies, senior caregivers and housekeepers. These discharged workers are among the lucky ones, if that can be said in this situation, as their employers respected them and their economic well-being enough to pay the necessary payroll taxes, payments that are now the lifeline for the unemployed workers.

The Basics on Household Employee Unemployment Benefits

• Who is eligible for unemployment benefits?

• Employees who have been terminated without fault — not for personal or performance reasons
• Employees paid “on the books” and paying their taxes
• Employees whose hours have been reduced or are unable to work during COVID-19
• Employees unable to work from home

• How do you obtain benefits payments?

• File online through the state unemployment benefits program
• Apply immediately after job loss
• Payment amount depends on state and wage history
• The CARES Act temporarily adds $600 a week to state payment calculations for benefits paid between April 5, 2020 and July 31, 2020

• When will you receive payment?

• Payments may be delayed due to the millions of backlogged current claims 
• You are entitled to receive backpay benefits from the start of unemployment
• If you’ve been paid in cash without a tax record, there may be an additional delay

Nanny Paid "OFF THE BOOKS"? A Financial and Ethical Dilemma

Families who have not been compliant with the "Nanny Taxes" - the very taxes that insure availability of unemployment insurance - who no longer need or can afford their nanny, senior caregiver, or housekeeper find themselves in a bind, both legally and ethically.

If you discharge your caregiver who is a US Citizen or Green Card holder - in other words an individual who is legally authorized to work in the US - she CAN file for unemployment insurance even though you did not pay the requisite payroll taxes. This triggers state and federal audits of YOUR records, and delays but does not deny her unemployment benefits - plus she will receive back compensation for the delay period. You, on the other hand, find yourself in a situation where you need to pay back taxes, interest and likely penalties. HWS can help you get your books in order pronto! We are offering a BOGO - We will do your 2019 catch up filings when you enroll for 2020 services.  Mention FREE 2019 when you call our office.  

The largest ethical dilemma is faced by the employer who hired a caregiver or housekeeper who did not possess legal US work authorization. Your tax compliance situation is moot, as this caregiver due to immigration status is ineligible for any unemployment benefits. We urge you, if you are still being paid, to continue to pay these caregivers even if they are unable to work for you at this time. This will pay off in loyalty to you when you need her to return to work.

Resources:

Unemployment Claims in the COVID-19 Pandemic

VIDEO: Families First Coronavirus Response Act (FFCRA) Summary for Household Employment

A Warm Good-bye: Writing the Letter of Reference