Taxes and Labor Laws
The National Alliance of Professional Nanny Agencies
POSITION PAPER
September 2003
Taxes and Labor Laws
APNA is committed to informing all agency owners of their responsibilities for encouraging household employers to comply with all relevant tax and labor laws.
APNA member agencies encourage all household employers to pay their employee(s) according to federal and state regulations. It is the responsibility of the employer to pay and treat their employee(s) fairly and professionally in accordance with the Fair Labor Standards Act and Publication 926 (Household Employer’s Tax Guide).
Taxes
APNA member agencies recommend household employers follow IRS employer guidelines. The IRS states that anyone who employs a household employee must comply with all state and federal tax laws. When the cumulative annual salary of a household employee meets the federal threshold, a household employer is obligated to arrange tax withholding from the employee’s wages for
- Social Security
- Medicare
A household employer must also:
- Contribute, dollar for dollar, the amount withheld for Social Security or Medicare taxes from the employee’s wages
- Pay employer federal and state unemployment insurance contributions for the employee
It is the employer’s choice to also withhold federal and state* income taxes for the employee, according to Publication 926. (*states
differ on the requirements for income tax and some states also have additional payroll taxes).
Worker’s Compensation and Disability
Most states require a household employer to carry a worker’s compensation and/or disability policy if the employer employs someone
on a full or part-time basis. These policies will cover the employer from lawsuits and liability in the event that their employee is
injured in their home whilst performing their job. APNA advises all household employers to contact their state’s insurance fund or
their homeowners insurance agent.
Overtime
Federal law states that overtime is to be paid to all live-out household employee positions after 40 hours per week. The laws for overtime vary state by state. APNA recommends that each household employer refer to the overtime laws for the state in which the employee will work. APNA advises household employers to investigate the laws with regard to full-time/part-time status as they apply to both live-in and live-out positions since they may differ.
Minimum Wage
The Federal Labor Standards Act requires that all household employees must be paid at least minimum wage (currently $5.15/hour). APNA recommends that all household employer comply with the Federal minimum wage requirements. If the employee works in a state with a higher minimum wage the employer should pay comply with their state’s labor law requirements.
Time-off
Although paid vacations, holidays and sick days are not required by law, APNA supports household employers providing time off, sick time and holiday time to their employees to help retain good employees, show their value and ensure the industry remains professional. Some states may have legal obligations for the employer with regard to time-off. The employer is advised to investigate with their own state’s Department of Labor.
Termination
In the event of termination, all employers are obligated to inform their employee that they may file to collect unemployment insurance. APNA recommends that household employers follow this regulation.
APNA encourages referral and placement agencies, household employees and/or or families that need further clarification of specific tax and labor laws to seek professional advice.
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