This is the second of a two-part series on how to comply with the law in California when you hire a household worker.
You’ve hired your nanny and started learning about the legal complexities that go along with being an employer, such as taxes, insurance and withholding for your employee.
Note that you may be eligible for the federal child care tax credit if you employ a nanny. The tax credit was designed to help working families pay for the care of children, adult dependents or an incapacitated spouse. Families can claim up to $3,000 per year for one child or dependent and $6,000 for two children or dependents. The tax credit varies from 20 percent to 35 percent of your child care-related expenses, depending on your family’s income.
But taxes are just part of the calculation when you hire a domestic worker. You also have to comply with labor laws, such as minimum wage, sick time and overtime. There are also requirements surrounding pay stubs and a written notice laying out terms of employment when the worker is hired.
Under AB 241, the California minimum wage for personal attendants is $9 an hour for the first nine hours of work and $13.50 – time and a half – for hours beyond nine in a day or more than 45 hours per week. Some cities, such as San Francisco, have a higher minimum wage, so check your particular city’s requirements. Note that personal attendants are individuals whose duties include supervising, dressing and feeding a child or someone who needs assistance because of a mental or physical disability or advanced age.
A domestic workers who spends more than 20 percent of his or her time on work other than supervising, feeding, and dressing a child or person who needs supervision is not considered a personal attendant. In that case, the employer must pay overtime after eight hours or more than 40 hours in a work week, unless the attendant lives in the home where he or she works.
Starting on July 1 this year, California employers have to provide a minimum of three days or 24 hours of paid sick leave each year for any employee who works at least 30 days. Employees can begin using their sick time 90 days after they begin working.
California requires employers to provide all household employees with a written California Wage Notice when they are hired. Employee must sign two notices – one to keep, and one for the employer’s records. Information to be included:
- Hourly and overtime pay rates, as well as any special pay rates
- The designated pay day
- The employer’s name, physical address and telephone number
- The name, address, and policy number of the employer’s workers’ compensation insurance carrier.
If any of the information changes, the employer must provide a new wage notice to the employee.
California law also requires employers to provide a pay stub each pay period. (Payroll service providers typically provide this service.) It must include:
- Gross wages earned
- Total hours worked
- All deductions
- Net wages earned
- The dates included in the pay period
- The name of the employee and last 4 digits of his or her Social Security Number or another employer identification number
- Employer’s name and address
- All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee
It is advisable to keep a daily log of the employee’s hours, which can be as simple as a 12-month calendar with the hours or wages written in daily.
Your domestic worker is eligible for unemployment. Because the taxes you pay include unemployment insurance, you won’t be charged directly. But don’t be surprised if your taxes go up the following year.
Cautionary note: If you aren’t complying with the law governing household employees, state and federal tax authorities will find out when your former employee files for unemployment.
If you’ve hired a household worker, don’t run the risk of tax penalties or a lawsuit for unpaid wages. Keep state and federal tax authorities happy – and your employee, too – by following the law.