Domestic Employment Laws in New York State

domestic employment laws in new york stateWhen it comes to paying household employees, A New England Nanny recognizes that nannies, housekeepers, senior care workers, etc. are professionals who should be compensated legally by employers with the appropriate taxes and benefits in mind. Here in New York, there are many nuances and details to know when it comes to paying domestic workers.

GTM Payroll Services has put together a guide for household employers in the Empire State to understand their responsibilities when it comes to paying their domestic worker. The guide is also beneficial to household employees for knowing their rights and what benefits they are entitled to.

Not only are there things like minimum wage, overtime, and workers’ compensation insurance to consider, but New York is one of only a handful of states to have a Domestic Workers’ Bill of Rights, which contains many protections and regulations specific to household employees. Plus New York has a Paid Family Leave law that all employers must abide by. Other items like disability insurance, the new employer SUI rate, and the state’s taxable wage base all must be considered when paying a household employee in New York.

Check out GTM’s guide, and if you have more questions about being a household employer in New York, contact them for a free consultation.

Do You Need to Pay Taxes for a Summer Nanny?

summer nanny taxesSchool will be out soon, and if you’re going to be hiring a nanny to care for the kids during the summer, you might think that since it’s only a temporary job, you don’t need to worry about payroll taxes or even insurance. But those requirements may apply even if you’re only hiring for the season.

Our friends at GTM Payroll Services have put together this list of what you need to know about paying taxes on a summer nanny:

Your Summer Nanny is an Employee

The IRS has consistently ruled that a nanny is an employee and not an independent contractor.

This distinction is important. With an employee, the worker and employer each pay Social Security and Medicare taxes. An independent contractor pays both their share and the employer portion of these taxes.

Why is a nanny considered an employee?

She is a worker who:

  • works under the direction and control of her employer
  • has her schedule set by her employer
  • uses the employer’s tools

Essentially, you are telling your nanny how to care for your children and when to show up to your to home to work. When she is working, she is using your tools, such as plates and utensils to serve lunch.

An independent contractor is told what is needed to be done and possibly when it needs to be done by. However, they determine how the work will get done, when they will perform the work, and will use their own tools to do the work.

Your Summer Nanny Makes $2,100

If your summer nanny passes the $2,100 cash wage threshold, then Social Security and Medicare (FICA) taxes need to be paid by both you and your employee. You each have a responsibility of 7.65 percent of cash wages for FICA for a total of 15.3 percent.

Your employee’s obligation can be handled through a paycheck withholding and you can remit both your and your employee’s taxes quarterly using Form 1040-ES.

A summer nanny can very easily reach this threshold. Let’s say she makes $10/hour for 25 hours of work per week for 10 weeks. That’s $2,500 in cash wages triggering the FICA withholding requirement.

There are some exceptions. Do not count wages you pay to your spouse, child under the age of 21, parent or any employee who was under the age of 18 at any time during the year.

You and your summer nanny may also agree to withhold income taxes from their pay. It’s not required that you withhold but it may be preferred so that your nanny won’t owe all of her tax obligation come tax time. You can remit income taxes quarterly.

Your Summer Nanny Makes $1,000 in a Calendar Quarter

Federal unemployment taxes are owed if your summer nanny makes $1,000 in any calendar quarter. We’ve already shown how easily this threshold can be reached. This tax is an employer-only tax (do not withhold from your employee’s pay) and is six percent on the first $7,000 in cash wages. You may also owe state unemployment taxes.

Again, there are some exceptions. Do not count wages you pay to your spouse, child under the age of 21 or parent.

You will need to pay unemployment taxes for employees under the age of 18 if they make $1,000 in a calendar quarter.

You May Need Workers’ Compensation

Workers’ compensation is usually required for household employers in New York. If your summer nanny works 40 hours in a week, even for just one week, you need workers’ compensation coverage for the entire time she works for you.

Follow Minimum Wage & Overtime Rules

Since your summer nanny is an employee, she is protected under the Fair Labor Standards Act. This means she must be paid at least New York’s state minimum wage, which is currently $10.40 per hour. Overtime also applies. Hours worked over 40 in a week need to be paid at no less than time and a half. There are some exceptions for live-in employees.

File Year-End Tax Forms

At the end of the year, you will need to provide your nanny Form W-2 (Wage and Tax Statement)while filing Copy A of this form and Form W-3 (Transmittal of Wage and Tax Statements) with the Social Security Administration. You’ll also file Schedule H (Household Employment Taxes) with your personal tax return.

Please contact us at (518) 348-0400 for more information about hiring a summer nanny. For more info about paying nanny taxes, call GTM at (800) 929-9213 for a free, no-obligation consultation with a household employment expert.

Retaining Your Nanny: an Infographic

Once you’ve found the perfect nanny for your family, you’ll want to do all that you can to retain your nanny. After putting a lot of time and effort into finding the right match, you’ll want to keep a good employee for as long as possible. Losing one employee and searching for a replacement is costly, time-consuming, and disruptive to your family, especially your children.

Based on recent surveys of household employers and nannies, our friends at GTM Payroll Services have created this infographic, which lays out the best practices for retaining your nanny. It includes what a nanny is looking for in a family, how to show appreciation for your nanny with bonuses and benefits, and why nannies want to be paid legally.

Establish your family as an employer nannies want to work for and improve their job satisfaction by following this data. A happier nanny leads to a more productive workplace – not to mention happier children! Click the image below for a larger version of the “Retaining Your Nanny” infographic.

retaining your nanny

 

 

 

 

 

 

 

 

Contact us for more information at (518) 348-0400.

2018 Tax and Wage Issues for Household Employers

2018 tax and wage issues for household employersWith a new year just around the corner, there are several tax and wage issues that will impact household employers, particularly those in New York, including changes to the minimum wage and mileage reimbursement rates.

Minimum Wage
On December 31, 2017, the minimum wage for employers in Upstate New York will rise to $10.40 per hour.

The wage for employers in New York City with 10 or fewer employees must pay $12.00 per hour. Employers in Nassau, Suffolk, and Westchester Counties must pay at least $11.00 per hour.

Mileage Rate
If you reimburse your nanny or other domestic worker for mileage, the standard mileage rates for the use of a car (plus vans, pickups, and panel trucks) are increasing, effective January 1, 2018. The new rates will be:

  • 54.5 cents per mile for business miles driven (was 53.5 cents in 2017)
  • 18 cents per mile driven for medical or moving purposes (was 17 cents in 2017)
  • 14 cents per mile driven in service of charitable organizations (no change from 2017)

New York Paid Family Leave
Beginning January 1, 2018, just about every employer in New York State – including household employers – will need to comply with the New York Paid Family Leave (NY PFL) law. Any employer that has 1 or more employees is required to provide coverage unless they are a public employer or are an employer-only exempt employee.

Employees can use the benefit to:

  • Bond with a newborn, adopted or foster-care child during the first 12 months after birth or placement
  • Care for a seriously ill family member
  • Address important needs related to a family member’s military service

Learn more about what employers and nannies need to know about NY PFL.

Nanny Tax Planning for 2018

nanny tax planning for 2018Hard to believe 2018 is less than two weeks away! Now is a good time to ensure that everything is in order so there are no surprises when it comes time to pay your nanny taxes next year. Don’t put off or ignore your 2017 year-end tax planning; look at your finances and think about any changes you will be making for the rest of this year and into early 2018. Some things to consider include:

  • Adding/decreasing your employee’s hours during the holiday season
  • Awarding a year-end bonus
  • Adjusting salary for 2018
  • Making note of the new minimum wage in New York
  • Vacation pay for the holiday season

The domestic employee coverage threshold amount will rise to $2,100 for 2018; this means that you are required to pay taxes if you pay a nanny at least $2,100 for the year. Make sure you keep accurate records of any changes you make, along with any changes to any federal or state tax and wage laws.

Contact us at (518) 348-0400 if you have any questions or need more information.

Hiring Through an Agency is the Right Choice

hiring through an agencyOnline job boards have become a more popular way for families to hire a nanny or other domestic worker in recent years, and while both agencies like A New England Nanny and job websites each have benefits, there are some key differences that demonstrate why hiring through an agency is the right choice.

In a survey of household employers conducted by GTM Payroll Services, it was clear that hiring a nanny through an agency rather than using an online job site saved time, boosted retention, and reduced the hassles of bringing on board multiple nannies over a short period of time.

A family that goes through an agency rather than an online job site when hiring a nanny, get a better quality nanny, one they’ll keep for longer, and they’ll spend less time finding the right match. For example, the survey found that 30% of families that hired through an agency had their current nanny for more than 3 years, while only 18% of those that hired through a website had their nanny for the same length of time. Also, 60% of agency-using families had one nanny in the past 5 years, where only 33% of website-using families had just one nanny in that timeframe. Finally, 59% of families that used an agency spent less than 20 hours on the hiring process, while only 24% of those who used a website spent less than 20 hours on the process.

In the same survey of household employers, 74% of those that hired through an agency said the hassle-free process and time savings was a top reason they decided to work with placement professionals. Agencies also aim to put forth the best matches for their clients as 91% of families said security and the screening of candidates was a top reason for going with an agency. Only the top applicants are presented to families for potential interviews, which helps cut down on time spent hiring and may result in a higher quality nanny whom the family will want to retain for a longer period of time.

The supposed benefit of using an online job site is a wider selection of candidates. However, 83% of respondents who used an online job site said the “number of responses from unqualified candidates” was one of the biggest drawbacks of going online to find a nanny. Sifting through applicants that don’t match a family’s criteria can add time and frustration to the hiring process.

Contact us at (518) 348-0400 to find out more about how we’ve been providing peace of mind to Capital Region families for over 26 years!

2018 Nanny Tax Threshold Increases

2018 nanny tax thresholdThe Social Security Administration recently released its employment coverage thresholds for 2018.

Social Security and Medicare taxes (commonly referred to as “nanny taxes”) must be paid by the family and the employee for any household workers, such as nannies or housekeepers, who earn $2,100 or more in cash wages in 2018. This is a $100 increase to the threshold which was last changed in 2016 to $2,000.

Wages paid to a spouse, child under age 21, parent, or any employee under the age of 18 do not fall under the nanny tax threshold.

Employers must pay 7.65% (Social Security at 6.2% and Medicare at 1.45%) in nanny taxes. The same amount can be withheld from the employee’s pay, or the employer can pay their worker’s share and not withhold. The total Social Security and Medicare taxes must be 15.3% of cash wages.

For more information on the nanny tax threshold, visit Employment Coverage Thresholds on the Social Security Administration website.

Learn more about paying your employee legally, and contact us at (518) 348-0400 for more information.

Hiring Senior Care: Options and Questions

hiring senior careFor families that wish to hire a caregiver for their senior loved one, there are many options available. It’s important to understand these options and to know what questions to ask.

There are typically three options for obtaining in-home senior care.

1. Home Health Care Agency: The agency employs the senior care provider to work in the family’s home and maintains control over the worker’s duties. The agency also takes care of payroll, taxes, insurance, and human resources.

2. Referral or Placement Agency: In this case, the agency charges a fee and then finds and recruits the in-home senior care provider on behalf of the family. Control over employment duties lies with the family who will manage payroll, taxes, and compliance with wage and labor laws.

3. Hiring Independently: When hiring on their own, the family finds, hires, and employs the in-home senior care provider. They control employment and handle the responsibilities of being a household employer.

Hiring through a home health care agency is typical when the senior has specific medical care needs that require a trained and licensed caregiver to perform medical treatment.

When nonmedical care is required, many families choose to hire independently or through a placement agency like ours. However, in these cases, the family becomes a household employer in the eyes of the IRS and other government agencies.

Three Benefits of Hiring Independently or Through a Referral/Placement Agency

1. More control
The family has more control over the employment arrangement and can choose how the care is managed.

2. Cost-effectiveness
It’s typically more cost effective especially if the senior needs less specialized care or only needs help for certain hours or days a week. The family saves money by taking on the management and supervision of the caregiver themselves.

3. Less “red tape”
There is far less “red tape” compared to hiring through a home health care agency. However, the family still needs to comply with all applicable tax, wage, and labor laws.

8 Questions to Ask About Your Senior’s Care Needs

However you (or your family) decide to hire an in-home senior caregiver, you’ll want to understand your objectives for bringing an employee into the home to look after your senior.

  1. How much and what kind of care does the senior need?
  2. How is each one of us able to help physically or contribute financially?
  3. Are there services in our community for older adults and their families?
  4. What specific duties will the caregiver perform?
  5. Which days and for how many hours do we need a hired caregiver?
  6. Can we, as a family, provide backup help if the hired caregiver is unavailable due to time off or illness?
  7. Who will be in charge of the hire and employment of the caregiver? This includes recruiting, background screening, managing payroll and taxes, and supervision of work.
  8. Who will act as the liaison with the senior care provider?

 

Learn more about our senior care services, and contact us at (518) 348-0400 with any questions.

Nanny Tax Compliance Infographic

Mistakes or misinterpretations of nanny tax compliance laws can mean IRS audits, thousands of dollars in fines and penalties or an employee lawsuit. Our friends at GTM Payroll Services have created this handy infographic that highlights what you need to do to maintain nanny tax compliance. Click the image below to view a larger version.

nanny tax compliance

New York Paid Family Leave and Household Employers

new york paid family leaveNew York State employers — including household employers — will be required to provide paid family leave to their employees beginning January 1, 2018. Our friends at GTM Payroll Services have put together this handy guide to ensure you are compliant with the new law and that your nanny knows how to use this benefit.

What is NYS Paid Family Leave (PFL)?

Passed in 2016, NYS PFL extends beyond the federal Family and Medical Leave Act (FMLA), providing employees paid leave for various family or medical reasons. PFL can be taken by male or female employees to:

  • Bond with a newborn, adopted or foster-care child during the first 12 months after birth or placement
  • Care for a seriously ill family member
  • Address important needs related to a family member’s military service

Your employee may receive wage compensation of up to eight weeks for PFL in 2018 with a maximum weekly benefit of 50 percent of their average weekly wage or the average New York State weekly wage of $1,305.92, whichever is less.

Full-time employees are eligible after 26 consecutive weeks of employment. Part-time workers can take advantage of PFL after 175 working days. They can expect to maintain their same or similar job upon their return to work.

Is my household employee covered by this new law?

Yes, household employees who work 40 or more hours a week and 30 days in a calendar year are required to be covered with both disability insurance and PFL. If your employee does not work at least 40 hours, you may set up a voluntary PFL policy or you may add PFL to your existing voluntary disability policy.

Who pays for NYS PFL?

The program is paid for by employees through an additional payroll deduction that can begin on July 1, 2017. New York State dictates the rate of this deduction and can change it each year. For now, the rate will be .126% of the first $1,305.92 earned each week (max. deduction of $1.65 per week).

While on paid family leave, employees are compensated through the program and not by their employer.

Who is the premium paid to?

Your disability insurance carrier will also be your carrier for PFL. The PFL premium will be paid when your disability premium is due.

Can I set this up if my employee does not work 40 or more hours per week?

You can purchase a voluntary PFL policy or you may add PFL to your existing voluntary disability policy. You can request a quote through our insurance department.

My employee works 40+ hours per week and I want her to be eligible for PFL but I do not have a disability policy set up. What should I do?

Household employers in New York State are required to have a disability policy when an employee works 40 or more hours per week. You can request a quote through our insurance department.

I have a disability policy and want my employee covered for PFL. Can I pay this for her instead of deducting it from her pay?

Yes. If you do not deduct the amount from your employee’s paycheck, then you will pay the cost on your employee’s behalf. You should contact your disability insurance policy administrator to find out how you would make a payment for the PFL policy.

Am I required to deduct the NYS PFL from my employee?

Technically, you are not. However, you will still need to pay the premium to your insurance carrier. If you do not deduct the amount from your employee’s pay, then you will pay the cost on your employee’s behalf. If you would prefer this method, please let us know as soon as possible so we can stop the deduction from your employee’s pay.

Source: https://gtm.com/household/new-york-paid-family-leave-household-employers/

 

For more information, contact us at (518) 348-0400.