In Southern California, many families have in-home help. Under California law, if you hire someone to clean your home or watch your children, you are obligated, in certain circumstances, to withhold taxes from that person’s payment. Paying taxes depends on the amount paid to the employee. For example, the salary of a caregiver for a child will be taxed if it is over $2,000 in one year.
Under current law, household employers must:
- Withhold Social Security, Medicare, and California state disability insurance taxes from their employee’s paycheck each pay period. While the law does not require that income taxes be withheld, most attorneys advise doing so to avoid having a large tax burden at the end of the year and being subject to underpayment penalties.
- File tax forms on a quarterly basis with the California Employment Development Department (EDD)
- Prepare a W-2 and distribute to each employee.
Household employers must also provide 24 hours of sick time to their employees each year. They can offer it up front or require the employee to accrue one hour for every 30 hours worked. Employees can use sick time 90 days after beginning work, and the employer need not pay for unused sick time if the employee has been terminated.
Caregivers and paystubs
Like other employers, California household employers must also provide a wage notice at the time of hire. This document should include information such as: hourly and overtime rates per hour; the regular pay day; employer’s name, physical address, and telephone number, and name, address and policy number of the employer’s worker’s compensation carrier.
The household employer’s paystubs to employees must also follow certain requirements. The paystubs must list gross wages earned; total hours worked; all deductions; net wages; dates included in the pay period; the name of the employee and last four digits of his or her Social Security number or other taxpayer identification number; employer’s name and address; and all applicable hourly rates in effect during the pay period and the number of hours worked at each rate.
Caregivers and overtime
Caregivers are entitled to certain overtime protections. Those who spend 80% of their time with a child or the elderly are exempt from the requirement that an employer pay double time for working more than 12 hours in a day. However, caregivers are still entitled to time-and-a-half for working more than 40 hours in a workweek or more than 8 hours in a day. Overtime is not required for work on a holiday.
If a household decides to terminate a caregiver, a “Change in Relationship Notice” must be provided to the employee at the time of termination.
For more information on California employment laws, contact attorney Drew E. Pomerance today.