5 Legal Mistakes When Hiring Household Employees

Nov 28 • Law • 100 Views • Comments Off on 5 Legal Mistakes When Hiring Household Employees

1. Treating them as independent contractors:

If we hire people to work in our home, the IRS may consider them as our employees. In general, we could be accused of tax evasion by classifying household employees as independent contractors. It should be noted that IRS may perform major enforcement initiatives to target key industries, such as household employments.

Legal Mistakes When Hiring Household Employees

2. Addressing overtime inappropriately:

Nannies, maids, gardeners, drivers and other household employees are typically non-exempt workers based on the Fair Labor Standards Act. It means, we need to pay overtime if they work for more than 40 hours each week. However, some live-in employees can be an exception to such a rule. However, some countries or states may still require live-in employees to be paid with proper overtime as well.

In general, overtime hours could be equal to 1.5 times regular hours. Many employers try to side-step overtime rules by offering specific salaries. However, such an arrangement is appropriate only for white collar professions and this kind of manipulation may make household workers more prone to abuse. In any case, we should make sure that employees receive proper overtime pays.

Overtime issues are especially dangerous for employers if they are not aware of statute of limitations. Former employees could file specific wage disputes, years after they no longer work inside the property. Interest, penalties and back taxes can make is a rather expensive mistake.

3. Putting employees in the standard company payroll:

Household employees don’t directly contribute the success of a business, but some employers put them on the standard company payroll. However, companies are entitles to make tax deductions on any payroll expense. In general, we should handle household workers separately using standard reporting process. It is also considered an insurance fraud to put household employees in the standard health plan of our company.

4. Failing to withhold and report payroll taxes properly:

Employers of household workers should administer proper payroll tax. They need to submit tax IDs of household employees to the federal tax authorities. Employers also need to calculate proper tax withholding and keep track of the total. They need to take into account things like Medicare, Social Security and other factors. Employers need to file quarterly tax returns regularly and remit the state taxes of employees.

5. Failing to secure compensations of workers’ insurance:

With workers’ compensation insurance, employers can ensure proper financial assistances due to medical costs and lost wages, if they become ill or injured due while they are working. Employers are required to carry the compensation policy of their workers. There are umbrella policies that can be included in the coverage of domestic workers. It should be noted that a few states require employers to obtain policy directly through the state.

If workers can navigate these potential problem areas, they can be entitled to multiple significant tax breaks. At the same time, employees can receive multiple critical protections and benefits. It is a clearly a bad idea to ignore these important details due to possible legal issues.

The Author is an expert in professional seo services. And can be reached via his website for any business seo related information and questions

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Related Posts

« »