Caregiver Wages

All of us are interested in preserving as much of our money as possible. Therefore, it may be very tempting, if you have the need for a caregiver in your home, to hire directly from an ad in the paper … or an organization or church that you belong to. After all, you can almost certainly get someone to sit with mom for less per hour than you would have to pay an accredited agency.

However, the hourly wage that you agree upon may be only the tip of the iceberg. The first thing you have to do is determine whether you should classify your new hire as an independent contractor or an employee. The primary reason for this is so that the tax situation with the IRS and the state of Texas can be properly set up. We have all heard about the trouble that some of the politicians in Washington have gotten into because of the so-called “Nanny Tax.” Well, when you hire a caregiver directly, you also may be liable for the Nanny Tax.

There are many things to consider to determine if your new caregiver is an employee or an independent contractor. But, the simplest way to look at it is:

If they offer the same type of services to other people at the same time and they determine when they will work and what they will do … they are probably an independent contractor and they should carry their own liability insurance and pay their own taxes.

If you tell them when they need to show up for work and what they should do while they are there, they are most likely your employee. If so, there are some responsibilities you may have well beyond writing them a check every week.

The state of Texas says that, if you pay them over $1,000 per calendar quarter, you must register with the state within ten days and pay unemployment tax on those wages. However, you are fortunate to be in the state of Texas, because, unlike many states, workers’ compensation would only be voluntary on your part.  But, they do require you to have a poster displayed with information about Texas unemployment benefits, Payday Law and a schedule of paydays.

Of course, another part of the Nanny Tax requires you and your caregiver to pay Medicare and Social Security taxes on a regular basis. And seeing that is done in a timely fashion is your responsibility. You will need to get an Employer Identification Number from the IRS.

Did you know that the American Journal of Industrial Medicine says that 52 out of 1,000 home health care workers are injured on the job each year? That could leave you open to a lawsuit.  At the very least, you should check with your insurance agent about adding a rider to your homeowner policy that will cover domestic help … most policies don’t automatically provide that coverage. And, if your caregiver may drive mom to her doctor’s appointment in your car, be sure they are listed as a driver on your auto policy.

Now, if your caregiver is injured, you have a couple of concerns. How are they going to pay for food and mortgage while they can’t work? Who is going to take care of mom while they recover?

Of course, there are non-monetary considerations as well. Do you have the resources to do a thorough reference and background check on your candidates? Even if you hire someone from your church, unfortunately, that is not assurance that they don’t have something undesirable in their background. A good home care agency will do that investigation as well as provide bonding for the caregiver.

Just don’t be too short-sighted when you consider something as important as becoming an employer to a caregiver coming into your home.