You must consider theses following things when hiring Household Employees;
1) A domestic worker is considered an employee, not an independent contractor. This is the most common mistake seen in the household employment industry, and worker miscalculation is considered tax evasion and punishes the worker in the form of higher taxes.
2) There is a difference between gross and net pay, and this should be communicated to the employee. Many household employees are typically paid "under the table" or gross pay, and when they find a household that wants to pay them legally they may not understand the difference in their paychecks (net pay).
3) Household employees should be paid an hourly rate and overtime. They are classified as non-exempt workers in the Fair Labor Standards Act, meaning their payroll should be set upon an hourly rate for every hour overworked, and should be paid overtime. (at least 1.5 times the regularly hourly rate) if the work more than 40 hours in a 7-day work week.
4) Benefits- Paid time off (holidays, vacation, sick days) is not required by federal law, but it is an important advantage to attracting good quality employees. (7 states do have paid time off or sick requirements).
5) Do NOT procrastinate. Most states have wage reporting obligations through the year. Employers must also withhold FICA. Additionally, many domestic workers qualify for the federal health insurance subsidy. These issues must be addressed before tax season or it is easy to find yourself behind making many mistakes and adding expenses.
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