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
CALIFORNIA LABOR LAWS
Hourly Pay: Household employees in California are covered by both the FLSA and California IWC Wage Order 15 and are non-exempt, hourly employees, paid at no less than the minimum wage.
Overtime: All personal attendants and other live in domestics are entitled to overtime calculated at 1.5 times the hourly rate for hours worked over 9 in a single day or more than 45 in a defined 7 day work week. Live-out domestics are entitled to overtime for more than 8 hours in a day or 40 in a week. Double time may be required for shifts longer than 12 hours.
Pay Rate Notice: You are required to provide your California household employee a pay stub every pay period that includes hours worked, hourly pay rate, and itemization of all payroll tax deductions.
Payroll Frequency: California allows you to pay your household worker daily, weekly, bi-weekly or semi-monthly, and does not permit monthly pay cycles. Pay upon involuntary separation is due immediately, and within 72 hours for resignation.
Workers' Compensation Insurance: California requires household employers to carry Workers’ Compensation Insurance. This is typically an endorsement in a California homeowner’s insurance policy.
Paid Time Off: California requires that all employers provide up to 3 days of paid sick leave per year. Meal and rest breaks are mandatory, but may be taken “on duty”and paid. Please note that California household employers who DO offer paid time off must allow unused accrued hours to carryover from one year to the next.
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!