Chapter 12 - Introduction ...
Hiring Child Care, Elder Care, or Household Help
Many people hire others to work regularly in their homes -- for example, to take care of their children during the workday, care for elderly parents, or clean their houses. These relationships are often set up informally, with no written agreement. But informal arrangements can be fraught with problems. If you don't have a written agreement clearly defining responsibilities and benefits, you and those helping you are all too likely to have different expectations about the job. This can lead to serious disputes -- even to either or both of you bitterly backing out of the arrangement. Far better to draft a clear written understanding of what the job entails.
The agreements in this chapter are for hiring child and elder care providers and other household workers who are employees, not independent contractors. When you hire an employee, you set the hours, responsibilities, and pay rate of the worker. Legally, most babysitters and household workers who work for you on a regular basis are considered employees for whom you are required to pay taxes, Social Security, and other benefits described below. In contrast, independent contractors typically own their own businesses and work for you only occasionally.
This chapter also includes a Child Care Instructions form you can use for either a full-time child care provider or an occasional babysitter.
For information on hiring independent contractors, see Working With Independent Contractors, by Stephen Fishman (Nolo).
Do not use this form if you hire a child or elder care worker or housecleaner through a placement agency. If you use an agency that sets and collects the worker's fee from you, pays the worker, and controls the terms of the work, the agency will have its own form for you to complete. People you hire through an agency are not your employees -- they are the employees of their agencies.
Legal Obligations for Employees
Assuming your child care worker, elder care worker, or housecleaner is your employee, you have legal obligations to that person. You also become responsible for a certain amount of paperwork and recordkeeping. You do not have to put this information in your child or elder care or housekeeping agreement, but you need to be aware of these responsibilities.
Social Security and Income Taxes. If you pay a child care or elder care worker $1,500 or more in a calendar year, you must make Social Security (FICA) payments on those wages and withhold the employee's share of FICA. You do not have to deduct income taxes from wages paid to an employee for working in your home unless the employee requests it and you agree to do so. You make these payments by attaching Schedule H, Household Employment Taxes, to your annual Form 1040.
Unemployment Compensation. If you pay a household employee $1,000 or more in a three-month period, you must pay quarterly taxes under the Federal Unemployment Tax Act (FUTA), using IRS Form 940 or 940-EZ. As with FICA, you pay this amount by attaching Schedule H, Household Employment Taxes, to your annual Form 1040.
Workers' Compensation. Your state may require you to provide workers' compensation insurance against job-related injuries or illnesses suffered by your employees. Check with your state department of labor or employment.
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