Are you considering hiring a nanny? Maybe a senior caregiver for one of your aging parents? Finding and hiring an experienced household employee helps provide the extra hand you need. But don’t forget, you’ll need to factor in the cost of hiring someone to work in your home. Paying them ‘under the table’ is illegal. Here are some essential things to remember when paying your employee fair and legally.
Always pay ‘on the books’
As a household employer, you have tax obligations. Paying your nanny or caregiver off the record is not legal and could be considered tax evasion. The government could impose significant fines or fees if they discover you have not been paying taxes for your employee. And it is not that hard to get caught - a simple unemployment benefits claim from a current or former employee can alert tax authorities to your status as an employer.
It is always best to pay honestly, with all local and federal taxes withheld. Various forms need to be filled out immediately, including a W4 form, I-9 form, and payroll direct deposit information. Not sure where to begin? Our team at HomeWork Solutions has developed state-specific tip sheets to help you understand what actions you need to take and what you’re required to withhold and pay.
Consider offering your employee insurance and benefits
You are not required in all states to offer benefits and insurance to your household workers. However, a good employer understands that providing benefits will help attract and retain the best employees. Not to mention, the last thing you want to do is train and become attached to a nanny or caregiver, then have them leave because they could get a job with better benefits. Paid vacation, reimbursement for continuing education courses, paid holidays, or reimbursing your employee’s insurance premiums or incurred medical costs are just ways to show your domestic employee you appreciate them and consider their wellbeing while they work for your family.
Don’t forget about overtime
Whether it’s a senior caregiver, a nanny, or another type of caregiver working in your home, the Fair Labor Standards Act states that household employees who live out of your home and work more than 40 hours a week should be paid 1.5 times their hourly wage. If they are live-in employees, they should be paid overtime at their regular hourly rate. Don’t be tempted to pay your employee a weekly salary to avoid overtime pay. Some states have stricter overtime rules, but laws vary. So, ask questions and research the regulations in your specific state.
At HomeWork Solutions, we understand that on boarding a new employee involves many steps that may feel unfamiliar or overwhelming. That’s why our experts can help get payroll and tax information set up before your new employee starts, including new hire reporting. Contact our team of specialists today at 800-626-4829 for more details on getting started.