Category Archives: household employment law

California and District of Columbia Minimum Wage Increases July 1

by Kathleen Webb of HomeWork Solutions

Nannies and other household employees, with limited exceptions, are covered under the Fair Labor Standards Act and must be paid no less than the greater of the Federal or state/local minimun wage.

Effective for work performed July 1, 2014 and forward, you must:

  • Pay your California household worker at no less than $9.00 per hour. Note there are higher minimum wage ordances in some cities such as San Francisco ($10.74) and San Jose ($10.00).
  • Pay your District of Columbia household worker no less than $9.50 per hour.

Clients who employ foreign household workers in the District of Columbia with a G-5 or A-3 visa must begin paying this higher minimum wage for work performed on July 1 and forward. As of 19 June 2014 the July 1 change to the prevailing local wage has not been published by the US Department of Labor.

To confirm the minimum wage where you live, click here.

Summer Nanny Payroll Services

by Kathleen Webb of HomeWork Solutions

School is out, and families nationwide are turning to summer nannies to provide safe, individualized caregiving for their young children over the summer holidays.

nanny w young boy1-resized-600Most summer nannies will earn enough over the summer to obligate the family for payroll tax payments and reporting – the so-called “nanny taxes.”

HomeWork Solutions is here to help! We will cheerfully prorate our summer nanny payroll or payroll tax-only service fees so you only pay for the services you need. You have a short-term need for services for a short term summer nanny and HWS can make this both easy and affordable.

What you need to know:

  1. If you pay your summer nanny $1900 or more, you are subject to the “nanny taxes”
  2. If you privately hired your summer nanny, a nanny background check is a recommended practice
  3. Workers’ Compensation Insurance may be legally required – HWS can help, our preferred vendor will issue this insurance for our clients with no application fee
  4. Your summer nanny is due a W-2 form in January 2015, be sure you have a permanent address

HWS’s nanny payroll specialists are available to answer your questions, provide you guidance, and help you estimate your payroll tax expense and your employee withholding. Best of all, this is a free telephone consultation! Call 800.626.4829 today.

Outsourced summer nanny payroll … important peace of mind for your family!

Unpaid Wages and Unpaid Overtime Lawsuits Rise for 7th Straight Year

by Kathleen Webb of HomeWork Solutions

The D.C. law firm of Seyfarth Shaw, specializing in Wage & Hour Litigation, reports that Federal lawsuits for unpaid wages and unpaid overtime – know as Wage and Hour Complaints – rose last year to an all time high of 8,126 cases.

describe the imageThis marks the 7th consecutive year that these Federal suits have risen, and they are up 438% since 2000. Richard Alfred, chair of Seyfarth’s Wage & Hour Litigation practice, reports that these numbers “would be even higher if wage and hour lawsuits filed in state courts under state pay practices, data which isn’t readily available, were added.”

For individuals, state wage and hour complaints are typically the first step taken to recover unpaid wages or unpaid overtime. Every state makes these services readily available to individuals, and there are support staff to assist with completing the paperwork and pursuing these matters.

Household employers can protect themselves from costly errors, as well as the embarassment of dealing with a formal complaint, by taking the following simple steps:

  1. Always have your household employee’s compensation IN WRITING and stated in hourly rate terms. HomeWork Solutions’ free Hourly Rate Calculator will translate your desired weekly wage to your household worker into the appropriate hourly and overtime rates for you.
  2. Maintain time and attendance records – either electronically using any number of available smart phone apps, or in paper form using tools such as a week at a glance calendar.
  3. Always pay for overtime. Families often think they can just offer compensatory time off (comp time) and avoid the extra expense. Don’t go there, it is not legal under the FLSA.

describe the imageHomeWork Solutions’ staff is available at any time for a free telephone consultation to help you understand these rules. Give us a call at 800.626.4829. Nanny unpaid overtime complaints have risen noticeably in the last decade, and an ounce of prevention can help you steer clear of this hassle.

BEING PAID UNDER THE TABLE CAN DELAY RETIREMENT

by Tom Breedlove of Breedlove & Associates

When a nanny, housekeeper or senior caregiver is paid legally, they are entitled to certain benefits that are earned through the payroll and tax process. But because many household employees are younger in age, sometimes they don’t realize how important these benefits are. In this edition of The Legal Review, the Hanson family finds themselves in a big mess after their long-time nanny decides she’s ready to stop working.

The Situation

The Hanson family lives in upstate New York and has employed a nanny named Bonnie for the past four years. Unlike most nannies, Bonnie was 60 years old when the Hansons hired her, but had a wealth of experience with childcare as she was a stay-at-home mom for most of her life. Before working for the Hansons, the only job Bonnie ever had was working in a local retail shop for 8 years. With her upbeat personality and her love for children, she was a great fit for the Hansons after their first child was born and they were ecstatic to hear she would take on the challenge of a second child two years later.

The Mistake

When the Hansons first hired Bonnie, they asked their neighbors how they handled hiring a nanny for their kids. The Hanson’s neighbors explained they paid their nanny like they would a babysitter and gave her cash at the end of each week. Bonnie agreed with this arrangement and she was paid in cash every Friday for four years.

The Law

When a family hires a household employee to work in their home, they are required to withhold Social Security & Medicare (FICA) taxes from their employee’s pay each pay period. Federal and state income taxes – while not explicitly required to be withheld – should be deducted as well to ensure the employee does not get stuck with a large tax bill during tax season.

The family is also required to pay a matching portion of FICA taxes, as well as federal and state unemployment insurance taxes. Some states, like New York, also require additional taxes to either be withheld from an employee or paid by an employer. Please visit our state-specific pages for details on the taxes in your state.

At the end of the year, the family is required to prepare a W-2 for their employee so they can file their personal income tax return. The family is also required to file Form W-2 Copy A and Form W-3 with the Social Security Administration and prepare a Schedule H to attach to their personal income tax return.

The Mess

After four years of working for the Hansons, Bonnie was 64 and nearing the age for retirement. In trying to prepare for this exciting time, she enlisted the help of a local CPA to gauge what her benefits would be so she could budget for the next chapter of her life. Unfortunately, when the CPA learned Bonnie had no employment records for the previous four years, he had to be the bearer of bad news and told her she was ineligible for Social Security benefits. This is because the Social Security Administration (SSA) requires a minimum of 40 credits (or 10 years of work) to be accrued before a person can earn retirement benefits – and Bonnie could only prove she had eight years in retail.

Bonnie was confused and asked the CPA how she could get credit for the last four years of her working career so she could retire at the end of the year. The CPA explained that the Hanson family would need to catch up on four years’ worth of payroll reporting and tax returns in order for the SSA to approve Social Security benefits for her. With this information in hand, Bonnie approached the Hansons, who were understandably embarrassed and guilt-ridden at the thought of their long-time nanny not being able to retire on her schedule.

The Outcome

The Hansons wanted to help Bonnie in any way they could. After four years working in their home, she was a valued member of their household and a grandmotherly figure to their children. The CPA Bonnie consulted with happened to have a couple of clients with household employees and told the Hansons to contact Breedlove & Associates about the late tax returns. While he knew the steps they needed to take to make everything right for them and Bonnie, he wasn’t interested in taking on four years’ worth of payroll and taxes.

The Hansons called Breedlove & Associates the next day and we were able to get them caught up on their employer taxes. We set them up as household employers with the IRS and the state of New York, gathered the four years’ worth of payroll information for Bonnie, filed the late tax returns, and best of all, sent tax information for the family and Bonnie to the Social Security Administration so Bonnie could get the working credits she needed for retirement. The family unfortunately incurred thousands of dollars in back tax payments and interest, but we were able to get the state of New York to waive the majority of the penalties they assessed. Bonnie will turn 65 in November and she’s now set up to retire just in time for the holiday season.

How the Whole Thing Could Have Been Avoided

If the Hansons had verified what their neighbor said via an accountant or even a simple Google search, they would have realized paying Bonnie in cash was not the right course of action. When families become household employers for the first time, they often have a laundry list of questions. It’s important that they are steered toward a resource that can set them up for success. We’re always available for your clients when they need this initial consultation and it’s free for them to call. Sometimes a ten minute conversation can save a family like the Hansons thousands of dollars.

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Built by household employers exclusively for household employers, Breedlove & Associates provides a no-work, no-worry solution to paydays, tax time and all points in between. If you have any questions about household employment or want to take advantage of our complimentary New Employer Orientation, just give us a call. We’re here to help.