Whether you have hired a live-in nanny or housekeeper, an estate manager, or someone else recently, there are some important things to keep in mind. You are now a household employer and there are some key rules to follow. There are tax requirements and domestic labor laws that are unique to household employers. Unfortunately, many people don’t know about this, and it can cause problems. Here are some tips on how to avoid headaches as a new household employer.
Your employee is not an independent contractor.
Hiring someone for a specific position in your home makes them an employee. Independent contractors get to choose how they do their job and when they do it. But if you control what their job duties are and what hours they need to be in your home, they are an employee, not a contractor. The IRS considers you an employer with a household employee. If you don’t pay them withholding proper taxes, you could be slapped with big fines and penalties, or could even be charged with tax evasion.
Create a written work agreement.
When you first bring on a new employee, write up a work agreement and make sure you both sign it. A work agreement outlines important details about their employment with you: wages/salary, payroll schedule, information about paid time off and paid holidays, and anything else you feel is necessary to establish in writing. Having a written agreement ensures that there is no confusion should a question or disputes arise later.
Always pay overtime.
Because of the Fair Labor Standards Act, in-home employees are considered non-exempt workers. That means that as the employer, you need to pay your employee overtime if they work over 40 hours in a 7-day workweek. Payment should be least 1.5 times their regular wage.
At Household Staffing, we understand that hiring a household employee comes with a lot of new things to learn. If you are unsure of how to begin the process of setting up your new employee’s payroll or tax withholdings, we partner with household payroll specialists to help! Contact us today to ask questions! Getting things set up the right way immediately ensures you and your employee are established legally and that there are no surprises later.