Payroll tax compliance for your new employee does not need to be terrifying, time consuming or expensive!
When you hire through CareLinx to care for your loved ones, you become a household employer. A household employer is someone who hires an individual to perform duties and provide services under their direction in a private home. Generally, these workers are your employee, not independent contractors. Failure to properly classify the worker and make the appropriate employment tax filings and payments is considered tax fraud by the IRS.
PAYROLL TAX RESPONSIBILITIES
You are responsible for employment taxes when you pay a household worker who is 18 years or older $2000 or more.
Social Security and Medicare Taxes: The household employer is responsible for the payment of all Social Security and Medicare taxes to the IRS. You may choose to either collect your employee’s taxes via payroll deductions or fund these taxes yourself.
Unemployment Taxes: You will make contributions to the IRS and state to fund unemployment and worker re-training programs.
Income taxes: Federal and state income taxes are ultimately the responsibility of the household employee.
Tax Filings: You have both Federal and State tax filing responsibilities. Federal employment taxes are reconciled with the household employer’s annual Federal Income tax return. Your state will require quarterly unemployment tax filings, reports and remittance. Employee wages are reported to the Social Security Administration. Your employee is due a W-2 form in January.
OTHER LEGAL RESPONSIBILITIES
Verification of Work Eligibility: All U.S. employers are required to verify a candidate's employment eligibility using Form I-9.
Fair Labor Standards Act (FLSA) Compliance: Maintain accurate and contemporaneous records including time tracking, gross pay calculations, and detailed records of all deductions from the employee paycheck. Pay no less than minimum wage on an hourly rate basis.
HAWAII LABOR LAWS
Hourly Pay: Household employees in Hawaii are covered by both the FLSA and Hawaii Domestic Workers Bill of Rights and are non-exempt, hourly employees, paid at no less than the minimum wage.
Overtime: All household workers are entitled to overtime calculated at 1.5 times the hourly rate for hours worked over 40 in a 7 day work week.
Pay Rate Notice: You are required to provide your Hawaii household employee a pay rate notice at time of hire that specifies both the hourly and overtime rates of pay. You are also required to provide your employee a pay stub every pay period that includes hours worked, hourly pay rate, and itemization of all payroll tax deductions.
Payroll Frequency: Hawaii allows you to pay your household worker daily, weekly, bi-weekly, or semi-monthly, and does not permit monthly pay cycles. Pay upon separation is due immediately.
Workers' Compensation Insurance: Hawaii requires household employers to obtain Workers’ Compensation Insurance if their payroll is $225 a quarter or more. You are encouraged to discuss your situation with your personal casualty insurance agent.
Paid Time Off: Hawaii requires that domestic workers receive a minimum of 3 days paid time off after one year of employment.
You are not required to provide employee health insurance, however there are financial and retention advantages to contributing some or all of your employee’s health insurance premium.
Questions? Ask us!