Hiring Caregivers: When You Are an In-Home Employer
If you or a loved one needs in-home help, you can either seek a caregiver through an agency, or hire one directly. While hiring through an agency who serves as the caregiver’s employer may involve less paperwork, it is not always ideal, or even possible, to find suitable and affordable care through an agency. Because agencies have overhead and are often for-profit companies, their rates tend to be higher. You may be able to hire a caregiver with a greater level of expertise for less if you hire the person directly. Agencies also may not send the same caregiver each day, depending on staffing and availability. If it is important to you to have one person continuously responsible for care, hiring help directly may be the best option.
If you choose to hire a caregiver yourself, these are some of the issues and requirements you ought to consider.
Determine the level of care needed
First, before hiring a caregiver, you should determine the level of care needed. Medi-Cal has a program called In-Home Supportive Services (IHSS) if you need help with chores and personal care. For low-income individuals who qualify for the program, Medi-Cal pays the caregiver (which can be a family member or friend) to provide assistance. The Veterans’ Aid & Attendance Pension program is also available to income-qualifying veterans who require in-home assistance. Again, the assistant may be a family member, although not a spouse. If you require more specialized assistance, a Licensed Nursing Assistants, Certified Nursing Assistants, and others can provide greater levels of care, but will charge more per hour.
Second, you must recognize that if you hire an in-home health provider who is not a member of your immediate family, that person is your employee – not an independent contractor. See Cal. Labor Code § 3357; Dynamex Operations West v. Superior Court, 4 Cal. 5th 903 (2018). (If the caregiver is a family member, different rules may apply.)
Obtain an Employer Identification Number (EIN)
If you have never employed anyone before, the first step is to obtain an Employer Identification Number (EIN) from the IRS. You must then issue paychecks that withhold federal and state taxes, including Social Security, Medicare, and state disability taxes. The best practice is to have your employee complete IRS Form W-4 and California Form DE 4 for tax withholdings, and then withhold taxes for them. (If you do not withhold taxes, your caregiver may be hit with a large tax bill at the end of the year.)
After the end of each year, you must issue a W-2 reflecting the employee’s wages instead of a Form 1099. You may, however, be able to take advantage of tax breaks that apply to home health care providers. It’s always best to consult a CPA or other tax professional to ensure you are handling these tax issues correctly. IRS Publication 926 also provides detailed information regarding tax treatment of household employees. https://www.irs.gov/pub/irs-pdf/p926.pdf.
Purchase Workers’ Compensation Insurance
In addition to taxes, you will also need to purchase workers’ compensation insurance. In California, it is mandatory for employers to have workers’ compensation coverage, even if they employ only one person. Additional information is available through the California Department of Industrial Relations at https://www.dir.ca.gov/dwc/employer.htm
Comply with California Employment Laws
Finally, if you employ a home health care professional directly, you must comply with federal and state labor laws regarding wages, sick leave, and breaks. There are federal wage and hour laws (Fair Labor Standards Act) and the California Labor Code. The United States Department of Labor has a guide to the FLSA’s requirements here: https://www.dol.gov/whd/homecare/homecare_guide.pdf
California laws can be more specific and more stringent, however, and include the following:
Minimum Wage & Overtime:
- Minimum wage: employers must pay at least minimum wage for all time worked. California’s Minimum wage for 2018 is $10.50/hour if you employ 1-25 employees. However, counties and cities may have higher minimum wages. Also, if you hire through the IHSS program, there are separate minimum wage rates that apply to IHSS assistants.
- Overtime: Caregivers who work more than 9 hours in a day or 45 hours in a week, are entitled to overtime at 1.5 times their regular rate of pay. Caregivers are also due 1.5 times their regular rate if they work a 6th and/or 7th day in a row due to an emergency and must be paid double-time for hours over 9 on the 6th or 7th Cal. Labor Code § 510; Wage Order 15, § 3(A)-(C).
Time Off & Breaks:
- Days off: Live-in caregivers are entitled to 12 consecutive off-duty hours each day (with exceptions for emergencies as defined in the Wage Order), and 3 hours’ (non-consecutive) of off-duty break time during a 12-hour shift. They are also get 24 hours off duty after every 5 days of work, again, except in case of emergency. Industrial Welfare Commission Wage Order 15-2001 (Cal. Code Regs § 11050). (The full Wage Order is available on the Department of Industrial Relations website: https://www.dir.ca.gov/iwc/WageOrders2006/iwcarticle15.html.)
- Meal and Rest Breaks: While live-in caregivers are entitled to 3 total hours of break time, non-live in caregivers are entitled to meal and rest breaks at certain intervals. Employees are entitled to an unpaid 30-minute, off-duty meal break for shifts over 5 hours, which must begin before the end of the 5th hour of work Cal. Labor Code § 226.7; Wage Order 15, §11. Likewise, if the shift is over 10 hours, a second unpaid, 30-minute meal break is required. Id. The employer and employee can agree to waive the first meal break if the shift is between 5-6 hours or can agree to waive the second meal break in shifts between 10-12 hours. The waiver should be in writing and signed by the employer and employee. Paid, off-duty, 10-minute rest breaks are due for every 4 hours or major fraction thereof, in shifts over 3.5 hours. Labor Code § 226.7; Wage Order 15, § 12. These are not waivable.
Wage Notices & Paycheck Stubs:
- Wage Notice: When you hire your caregiver, you need to provide a notice disclosing hourly rates and frequency of pay; overtime rates; any meal or lodging allowances; the regular payday; the employer’s name, address(es) and phone number; contact information for the workers’ compensation carrier; and sick leave information. Cal. Lab. Code § 2810.5(A)-(H). A sample notice is available on the California Department of Industrial Relations’ website, in several languages, here: https://www.dir.ca.gov/dlse/governor_signs_wage_theft_protection_act_of_2011.html.
- Paystubs or “Wage Statements”: with each paycheck, you will need to provide a pay stub – called a “wage statement” under California Labor Code section 226(a) – that includes the following information:
- gross wages earned;
- total hours worked by the employee…;
- the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis;
- all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item;
- net wages earned;
- the inclusive dates of the period for which the employee is paid [e.g., the date range for which the employee is being paid];
- the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number;
- the name and address of the legal entity that is the employer…; and
- all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee ….”
Each wage statement must also show any deductions (including for taxes), the date of the payment, and the employer must keep a copy of each statement.
This is not a complete list of requirements. If you hire an in-home caregiver, consult an employment attorney with any questions to ensure the process goes smoothly.