Many elderly people are being cared for at home rather than at a board and care, assisted living or skilled nursing facility. Often the personal care giver is someone who is employed directly by the elderly person or by the elderly person’s family. These employment arrangements cover a wide spectrum of personal care services at home and are subject to both US and California tax and labor laws. Anyone thinking to hire a caregiver should first educate themselves on the many issues involved with selecting, hiring and supervising a care giver.
In California, the wage, hour and working conditions for all persons employed in household occupations are subject to the state Industrial Welfare Commission (IWC)’s Wage Order 15, the state Domestic Worker Bill of Rights (section 1450 et seq. CA Labor Code) and also to the federal Fair Labor Standards Act (FLSA).
In addition, federal immigration laws only permit persons who are legally present and allowed to work in the US to be hired. Hiring an undocumented caregiver is a violation punishable by fines.
Minimum wages and overtime compensation laws apply to household employees. Paying a flat rate to a caregiver can – down the road – result in a lawsuit against the employer for unpaid wages and over time. Later, when the relationship terminates, the caregiver may file for unemployment and report that they were previously a care giver and learn that they were underpaid. An employee who is successful can recover the unpaid wages, litigation costs, and interest and penalties.
An employer must provide the employee a notice that discloses the hourly and overtime rates of pay, the pay frequency and pay day, and other information at the time of hire, and at any time there is a change to the hourly pay rate. This and other information about the employee’s duties and rights and the employer’s obligations, should be part of a written employment agreement.
The IRS sees household employees who are paid more than $2,100/yr. (2019) as employees and not as independent contractors. Both California and the IRS impose payroll responsibilities on employers of household employees to report, withhold and remit taxes. Paying under the table constitutes tax evasion.
Competent third party payroll services, book keepers and accountants can assist domestic employers with meeting such requirements. Not meeting the requirements can be a very costly mistake when the tax authorities catch-up.
California’s Employment Development Department (EDD) also considers household employees as employees who must meet EDD’s unemployment and disability insurance requirements. Accordingly, EDD requires employers of household employees to register once they have paid $750 as compensation in a calendar quarter (3 months) to one or more household employees.
Worker’s Compensation is yet another requirement applicable to employing household workers. In California, most (not all) homeowners insurance companies will provide this coverage as a rider to your homeowners policy.
You may decide to avoid these issues by not employing a caregiver. What are the alternatives?
In California, anyone who qualifies for community based Medi-Cal can apply for In Home Supportive Services (“IHSS”). IHSS pays a minimal wage to an IHSS worker to provide a certain number of hours in domestic and personal care services to low-income aged (65 or older), blind and disabled persons. The IHSS worker is often a family member or a personal friend. Having an IHSS worker means that IHSS deals with the wage and labor law issues discussed above.
Hiring an outside agency that employs the in home care giver avoids the issues discussed above. However, many people simply cannot afford to pay for such services.
Numerous online resources, including the following, provide useful information: Family Caregiver Alliance (www.caregiver.org), Paying for Senior Care (www.payingforseniorcare.com), and the Lake County Law library’s online Nolo E-books (see www.lakecountyca.gov/Government/Directory/LawLibrary).
Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at dennis@DennisFordhamLaw.com and 707-263-3235.