An Educational Publication of Redlig Financial Services Inc.
THE COMPLETE GUIDE TO
HOUSEHOLD
EMPLOYMENT
IN NEW YORK STATE
SECOND EDITION
EVAN GILDER
1
REDLIG
FINANCIAL SERVICES
REASSURANCE THROUGH LIFE´S JOURNEY
REDLIG
FINANCIAL SERVICES
REASSURANCE THROUGH LIFE´S JOURNEY
THE COMPLETE GUIDE TO
HOUSEHOLD
EMPLOYMENT
IN NEW YORK STATE
SECOND EDITION
EVAN GILDER
TABLE OF CONTENTS
Preface..................................................................................... 6
Withholding Tax Remittance Requirements...........................44
About the Author.................................................................... 8
Metropolitan Commuter Transportation
Mobility Tax (MCTMT).................................................................45
Introduction............................................................................ 10
Demographics.............................................................................11
Workers Compensation and Disability
Benefits Insurance......................................................................46
The Decision to Employ Privately......................................... 14
Penalties for Non-compliance...................................................47
Federal Labor Law Definitions.............................................. 16
Frequently Asked Questions (FAQ)....................................... 51
Fair Labor Standards Act (FLSA)................................................16
Questions on Federal Labor and Employment Laws.............51
Independent Contractor vs. Employee....................................20
Questions on New York State Employment and
Labor Laws..................................................................................57
Employment Eligibility................................................................22
Federal Tax Requirements and Obligations........................ 23
Social Security and Medicare....................................................25
FUTA Tax......................................................................................26
Federal and State Income Taxes...............................................26
End of Year Filing Requirements..............................................28
New York State Tax and Employment Obligations............. 30
Domestic Worker Bill of Rights.................................................31
Wage Theft Prevention Act........................................................34
Notice of Acknowledgement of Pay Rate and Payday...........35
New York State Wage Statement Requirements....................38
Employer Registration in New York State................................40
New Hire Reporting....................................................................41
Unemployment Insurance.........................................................42
Resources................................................................................. 61
Federal Forms and Publications...............................................61
Federal Phone Numbers............................................................61
New York State Forms and Publications..................................62
New York State Phone Numbers..............................................63
Disclaimer....................................................................................64
Questions....................................................................................64
Online Tools and Resources......................................................64
About Redlig Financial Services Inc...................................... 65
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
PREFACE
Law attorneys and families will find this booklet helpful
in guiding their families and clients.
T
he purpose of this guide is to provide education, knowledge, guidance and information on
the complex laws that families must comply with
when employing someone in their household. Many
people are unaware that when they hire domestic
workers, they become employers, subjecting them to
complex rules and regulations to which they must adhere. The goal of this booklet is to share my knowledge,
gained from years of experience specializing in household employment issues, and address the concerns
brought to us, by present and past clients, through
years of calls and discussions.
This guide is geared towards families employing nannies, companion-caregivers to the elderly, and other
types of home based workers. It should be noted that the
term domestic employer/employee is a legal definition
and household employer/employee is a common term.
For purposes of this guide, these two terms are used interchangeably, unless specifically stated otherwise.
The guidance contained herein is not legal or tax advice and is intended to help families address the most
common questions that arise once a family decides to
hire someone. It is meant to provide clear, concise information that will allow an employer to understand, and
remain compliant with, the employment laws.
This guide is separated into two sections: The Federal regulations, which can be thought of as foundation
building blocks, and then State and Local regulations,
which revise and modify the Federal laws by providing
additional protections to domestic employees.
Please note that this guide will not go into any detail
on the role of third party employers, such as home care
or companion agencies or the differences in legal interpretations that exist between them.
It is with this purpose, that we, as an accounting firm,
have chosen to assist our clients in managing the totality of this process on their behalf, and shield them from
the risks described herein. It is our hope that other professionals, such as Social Workers, Care Managers, Elder
6
7
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
ABOUT THE AUTHOR
This fundamental flaw exposes families to unnecessary
and unanticipated risks.
E
van Gilder has devoted his career to helping families and
professionals navigate the
complex array of labor and tax laws
that families are required to abide
by. His clients have relied on his
ability to educate and simplify the
complicated path of employment
and manage all aspects of these moving parts on their
behalf.
As an advocate for fairness and transparency in the domestic employer-employee relationship, Evan remains at
the forefront of changes in domestic employment laws,
and continually provides a professional education series
called “It’s More Than Just Payroll” to accountants, attorneys and social workers on a regular basis.
Household employers are under the assumption, belief and expectation that payroll service providers provide guidance and advice on domestic labor laws. Shockingly, almost all payroll service providers are not capable
of providing this type of support because household employers represent such a small segment of the overall
employment market and the rules covering businesses
are dramatically different from those from households.
8
It is not uncommon to receive calls from people seeking guidance after receiving stiff penalty notices over violations of rules they either did not know existed or had
thought were previously addressed. Others are given
poor guidance and advice from professionals who are
not familiar with the rules, which results in additional
compliance issues that cost lots of time and money to
resolve.
Recognizing these gaps, Evan has built a successful
practice encompassing employment tax, labor, compliance education and advisory. This practice includes aspects of reporting, and offers easy integration with evidentiary requirements for Long Term Care insurance
policy claims and fiduciary accountings. It encompasses
workers’ compensation and disability insurance reporting and is fully tax and fiduciary compliant, eliminating
the potential for out of compliance penalties while minimizing risks and costs for families.
As a principal at Redlig Financial Services Inc., a New
York based accounting and tax advisory firm in New York,
Evan runs the Family Financial Office Practice, which encompasses Employment (Payroll, Unemployment and
Workers Compensation), Bill Paying, and Family financial
office management.
9
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
thoroughly interview and perform background checks
on all candidates. They are quite helpful in finding the
right person for the right job. Registries do not act as employers when the proper candidate has been identified.
INTRODUCTION
T
he decision to employ someone is often long,
drawn out and complicated, filled with many
questions that families often struggle to address
correctly. It often includes a delicate balance between
need and cost, with complicated factors such as:
»» the balance between dependence and independence;
»» the balance and flexibility with household needs, such
as cleaning, meal preparation and companionship;
Protecting the needs of an individual, especially someone with a mental and/or physical incapacity, often involves invoking and utilizing a Power of Attorney. A
Power of Attorney, often called a POA, comes in many
different formats, with limited and durable powers of
attorney being the most popular. In addition, there are
other types of fiduciaries, such as Trustees and Guardians, who are legally tasked with protecting the needs
of individuals and their assets, based upon specific and
court mandated instructions. Careful guidance and advisory services are crucial to understanding the fiduciary
obligations that come with the appointed role.
»» changing needs associated with progression of mental
and/or physical incapacity;
»» cultural and gender preferences and biases;
»» attending social activities and events, including doctors’ appointments; and
»» medically complex needs and requirements, just to
name a few.
Private placement registries can be very helpful to families in facilitating staffing needs and requirements. They
have well qualified candidates to choose from and they
10
DEMOGRAPHICS
People who work in households represent a growing
segment of the employment market. This is most commonly associated with maids, nannies, private nurses,
caretakers and home health aides. The latter is a direct result of demographics and the aging of the “Baby
Boomer” generation combined with their increased life
expectancy. According to the US Department of Health
11
Call 646-827-3600 For a Free Consultation
98.2
Figure 1
Number of Persons 65+
1900 to 2060 (numbers in millions)
82.3
56.4
44.7
35.0
25.5
16.6
An Educational Publication of Redlig Financial Services Inc.
to burgeon as the “baby boom” generation begins to
reach age 65.
The population age 65 and over has increased from
35.9 million in 2003 to 44.7 million in 2013 (a 24.7% increase) and is projected to more than double to 98 million in 2060. By 2040, there will be about 82.3 million older persons, over twice the number of 2000. People 65+
represented 14.1% of the population in the year 2013
and are expected to grow to be 21.7% of the population
by 2040. The 85+ population is projected to triple from 6
million in 2013 to 14.6 million in 2040.
9.0
3.1
4.9
1900 1920 1940 1960 1980 2000 2013 2020 2040 2060
Source: U.S. Census Bureau, Population Estimates and Projections
and Human Services, the older population, defined as a
person 65 and older, numbered 44.7 million people in
2013. This represents 14.1% of the United States population, about one in every seven Americans.
The older population will continue to grow significantly well in the future (see Figure 1). This growth slowed
somewhat during the 1990’s because of the relatively
small number of babies born during the Great Depression of the 1930’s. But the older population is beginning
12
13
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
and associated benefits, thereby eliminating any potential miscommunication.
THE DECISION TO
EMPLOY PRIVATELY
T
It should be noted that in August 2015, the United
States Court of Appeals overturned a lower court ruling on proposed changes to the Federal minimum wage
and overtime laws specifically impacting third party employers, such as home care agencies. The change to the
“Companionship exemption” rules had a profound effect
on the household employment market nationwide by restricting how the exemption can be used.
he main reason why someone decides to hire
privately can be summed up in two words:
“Control” and “Cost”. Families want to maintain
control over the job requirements and responsibilities
regarding care, and want the final say on job functions.
In addition, employing someone privately can result in
savings of at least 25% (and often more) when compared with the cost of using a third party employer,
such as a homecare of companion agency. Families
also have different strategies available to them when
paying for live-in and sleep-in care.
This means that a well thought out strategy is imperative to making the process easy and manageable. For
instance, not only is it important to understand the laws
around employment, but it is equally important to have
employment contracts in place, stating clear and concise
terms of employment, work hours and schedule, payday
14
15
Call 646-827-3600 For a Free Consultation
FEDERAL LABOR
LAW DEFINITIONS
A
Domestic (or Household) Employer is defined
as someone who pays a worker to perform
duties in or around their home(s). The worker
is your employee when you can control not only what
work is done, but how it is done.
FAIR LABOR STANDARDS ACT (FLSA)
The Fair Labor Standards
FEDERAL MINIMUM
Act (FLSA) protects workers
WAGE
by providing wage and hour
standards that employers
The federal minimum
must follow, such as paying
wage is $7.25 per
the federal minimum hourhour. The rate has
ly wage and overtime. With
remained unchanged
some significant exceptions,
since July 25, 2009.
most of these protections
apply to domestic workers,
which is the legal term for household employees. (Al16
An Educational Publication of Redlig Financial Services Inc.
though domestic workers were previously excluded
entirely from the law, FLSA was amended to include
them in 1974). However, domestic workers who reside
in an employer’s home are not covered by overtime law,
though they are still covered by the federal minimum
wage law. 29 U.S.C. § 213(b)(21). Additionally, domestic
workers are not covered by minimum wage or overtime
law if employed on a “casual basis” to provide “babysitting services.” 29 U.S.C. §213(a)(15). However, babysitting is not deemed to be on a “casual basis” if the worker is employed by an employer or agency other than
the family or household using their services, 29 C.F.R.
552.109(b).
Similarly, domestic workEXEMPTION
ers are exempt from minOVERRIDDEN
imum wage and overtime
if employed to provide
The companionship
“companionship services for
service exemption
individuals who (because of
from minimum wage
age or infirmity) are unable
regulations has been
to care for themselves.” 29
eliminated in many
U.S.C. §213(a)(15). Like the
states such as New
babysitting exemption, the
York, California,
companionship exemption
Illinois, and Colorado,
dates back to the 1974
just to name a few.
FLSA amendment, when it
was originally intended as
a narrow carve-out to the law’s coverage. Because of
the broad interpretation of this exemption, the U.S.
17
Call 646-827-3600 For a Free Consultation
Department of Labor has amended, effective January
1, 2015, the definition of how the companionship exemption may be used. Under the revised definitions,
the term companionship services mean the provision
of “Fellowship and Protection” for an elderly person
or a person with an illness, injury or disability, who
requires assistance for caring for himself or herself.
The provision of “Fellowship” means to engage the
person in social, physical or mental activities, such as
conversation, reading, games, crafts, accompanying
the person on walks, errands and appointments.
The provision of “Protection” means to be present
with the person in their home, or to accompany the
person when outside of the home and to monitor the
person’s safety and well-being. This must be the primary role for the worker if the employer is able to use
this provision.
In addition, while other services may be performed in
the home, such as cooking, cleaning, washing of clothes
and meal preparation, or other similar services, it must
not exceed 20 percent of the total hours worked per
work week or it will invalidate the use of this exemption
for that week. It therefore becomes very important to
be able to track the length of time for specific services
being performed to determine adherence to the rules
on a weekly basis.
The goal of the redefined exemption was to limit its
use to workers who chiefly provide true companionship
18
An Educational Publication of Redlig Financial Services Inc.
services and specifically exclude many other types of
work performed in a household setting. It should be
noted that the Companionship Exemption may only be
used by a household employer. It specifically excludes
use by third party employers such as home care agencies.
The DOL further states that “the term “companionship services” does not include services performed by
trained personnel such as registered or practical nurses. Registered nurses are exempt from the FLSA’s wage
requirements where their time is spent in the performance of the duties of a nurse and are paid on a salary
or a “fee basis” as defined by Regulations, 29 CFR Part
541.”
Translation: Individuals who are trained personnel
with licensing such as RNs or LPNs are ‘exempt’ from
the FLSA and are not considered ‘domestic employees’
at all. They are free to negotiate a wage that is paid on
a fee basis, salary, or hourly at their discretion. Depending on circumstances, they may still be considered your
employee, simply not under the classification of ‘domestic employment’ as discussed in the FLSA.
Under the definitions set in the FLSA, domestic employees are also classified as non-exempt employees.
As such, the pay frequency of a household worker (the
maximum interval between wage payments to the
worker) is governed by individual state law.
19
Call 646-827-3600 For a Free Consultation
INDEPENDENT CONTRACTOR VS. EMPLOYEE
For many years, it was quite common, although completely incorrect, to misclassify domestic workers as
Independent Contractors. The Internal Revenue Service
and the United States Department of Labor have both
repeatedly documented the illegality of this arrangement. There are also major enforcement initiatives under way at both the Federal and State level to address
this issue.
The IRS has published and provides multiple documents and online tools to properly determine employment classification and eligibility. At the core of the rules
are evidence of the degree of control and independence
over the specific employment arrangements as follows:
1. Behavioral Control
2. Financial Control
3. Type of Relationship
Behavioral control refers to the right to direct and control how a worker does the work. A worker is an employee when the employer has the right to direct and control
the worker.
Financial control refers to facts that determine whether the business has the right to control economic aspects
of the employee’s job. The financial control factors fall
into categories such as significant investment, unreimbursed expenses, opportunity for profit or loss, services
20
An Educational Publication of Redlig Financial Services Inc.
available and marketed to
the market and the mechanism of payment.
IRS
DOCUMENTATION
Since no economic benefits are associated with
household employment,
this aspect of the laws are
not relevant.
The IRS has assembled
detailed documentation
on this topic. It can be
found at: http://www.
irs.gov/Businesses/
Small-Businesses-&-SelfEmployed/IndependentContractor-SelfEmployed-or-Employee
The type of relationship
refers to the facts that
show how the worker and
business interact in their
relationship with each
other. In addition, a contract, regardless of what it states,
does not by its nature determine the worker’s status.
Therefore, someone contractually stating their designation as independent contractor is not necessarily interpreted as such by the IRS. If there are any benefits provided, such as insurance, paid vacation or sick time, they
will likely not be considered an independent contractor,
as these are generally considered employee benefits.
It is also important to understand that even if someone does not work for an extensive number of hours, it
does not change whether or not they are considered an
employee or not. This is especially relevant as it relates
to State Labor Laws, which generally cast a wide net in
classifying workers as employees.
21
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
EMPLOYMENT ELIGIBILITY
The Immigration Reform and Control Act of 1986 requires all employers to verify that new employees are eligible to work in the United States. Accordingly, employers are required to maintain records showing that their
employees are eligible to work. In particular, all employees must complete United States Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility
Verification, no later than the first day of work.
Employers must retain an employee’s completed I-9
for as long as the individual is employed. If an individual’s employment is terminated, their form must be retained for three years after the date of hire, or one year
after the date their employment was terminated, whichever is later. The I-9 can be retained in either paper or
electronic format.
Please note that Form I-9 does not need to be completed for a person providing domestic services in a private
household that are sporadic, irregular, or intermittent.
FEDERAL TAX
REQUIREMENTS AND
OBLIGATIONS
O
nce you decide
CURRENT TAX
to become a
THRESHOLDS
household emThe minimum reporting
ployer, you must obtain
requirements for
a Federal Employer Idenwithholding of Social
tification Number (EIN).
Security and Medicare
An EIN acts as a masking
tax is $2,000 in annual
mechanism to hide the
compensation. The social
employer’s social securisecurity maximum base
ty number on all tax doclimit for 2017 is $127,200.
uments. Additionally, it
adds an additional layer
of security when it comes to identity theft.
The IRS will only provide an individual with one EIN in
their lifetime. If you have ever obtained an EIN previously, for yourself, even for a sole proprietorship (business),
22
23
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
you will need to reuse (and if necessary, reactivate) the
EIN if you begin employing someone.
SOCIAL SECURITY AND MEDICARE
If you apply for an EIN onIRS EIN ASSISTANT
line via the IRS website, it is
possible the IRS may deny the
To request an EIN
request. If that happens, you
from the IRS, go to:
will receive an error code,
https://sa.www4.
known as a reference numirs.gov/modiein/
ber. Please make a note of it
individual/index.jsp
as you will need to refer to it
when you call to follow up on
The IRS Business
the error. The two most comand EIN assignment
mon causes for the denial
phone number is
of an EIN number are: 1) the
(800) 829-4933.
incorrect taxpayer information furnished on the application request, and 2) the IRS has previously issued an
EIN to the taxpayer. When you call up the IRS to resolve
the issue, you will need to provide them with the system generated reference number. Be aware that when
interacting with the IRS, expect a long wait time on the
phone before you speak with an individual agent. In
addition, the IRS will only deal with the taxpayer directly, unless there is an IRS Power of Attorney on file (Form
2848), which is different from a legal limited or durable
power of attorney that you may already have.
24
Household employers, just like regular employers, are
legally required to withhold Social Security and Medicare
tax from each of their household employees who are
over the age of 18 and earns $2,000 or more of income
in a calendar year. The Social Security withholding tax
rate is presently 6.2% and the Medicare withholding tax
rate is presently 1.45%.
In addition, employers are also required to match the
employee’s share of taxes for Social Security (6.2%) and
Medicare (1.45%) for all employees. The Social Security
tax has a maximum taxable amount within its calculation
that changes every year. For 2017, the applicable taxable
maximum amount is $127,200 of annual income. Medicare, on the other hand, has no maximum limit within its
calculation. Therefore, an employer’s overall tax liability
is 12.4% for Social Security and 2.9% for Medicare taxes.
I am often asked, by the employer, about the intention of paying the employee’s share of Social Security
and Medicare tax directly. Since the employee is legally
obligated to remit the tax payments to the taxing authorities, it is not a problem to do so, with one caveat. The IRS
considers this arrangement to be an employee benefit.
As such, it is a taxable benefit and must be grossed up in
the employees pay.
25
Call 646-827-3600 For a Free Consultation
FUTA TAX
The Federal Unemployment Tax Act (FUTA)
is a tax paid directly by
the employer. Household employers are
subject to FUTA tax if
they paid total cash
wages of $1,000 or
more to household
employees in any calendar quarter for any
non-family employee.
CURRENT FUTA
TAX CALCULATION
(APPLIES TO FIRST $7,000
OF EMPLOYEE EARNINGS)
Effective tax rate of 0.6%
translating into a per
employee cost of $42.
For CRS states, effective tax
rate is 1.2% translating into
a per employee cost of $126.
Employers generally receive a 5.4% credit for state unemployment taxes when they file their tax form, which
results in a 0.6% net FUTA tax rate, or $42.00 per employee. However, certain states, considered Credit Reduction States (CRS), have a reduced credit of 1.2%, reducing their FUTA Credit to 4.2% Benefit Cost Rate (BCR).
FEDERAL AND STATE INCOME TAXES
By law, employers are not required to withhold Federal or State (and city/local) income taxes, where applicable, from the paycheck of domestic employees, unless
specifically requested. This poses problems and as a
practical course of action, it is encouraged for employers
to withhold income taxes as a standard practice for the
following reasons:
26
An Educational Publication of Redlig Financial Services Inc.
1. Domestic employees are often not able to properly budget their tax liabilities, often creating end of
year complexities with large tax liabilities as a result of inadequate tax planning.
2. Logistically, it is no more complicated to withhold
these taxes since it does not require any additional
tax filings.
3. Psychology is a very important factor in retaining
good workers and employers often work hard to
ensure the workers remain happy. Providing this
option is often a necessity, even if not legally mandated.
The calculation of withholding taxes is determined by
tax tables that are published every year by the Internal
Revenue Service and State Taxing authorities (where
applicable). It is directly tied to the withholding tax elections that an employee specifies when they complete a
W-4 form for their employer.
Therefore, as a best practice, it is beneficial to withhold income taxes from an employee’s paycheck, which
works to everyone’s benefit.
Please be aware that many states also have their own
respective withholding tax forms, similar to the W-4
form, which allow an employee to specify their respective state withholdings. These forms are only required
to be completed when an employee elects to withhold a
different level of withholdings from the federal withholding election.
27
Call 646-827-3600 For a Free Consultation
END OF YEAR FILING REQUIREMENTS
At the end of the fiscal year, employers are required
to provide to all employees completed W-2 forms by
January 31 of the following year. There are four different parts of a W-2:
An Educational Publication of Redlig Financial Services Inc.
END OF YEAR TAX FILINGS
1. Copies B&C are to be provided to the employee.
Copy B contains tax filing instructions for the employee and Copy C contains three copies of the
form provided.
2. Copy A is to be filed with the Social Security Administration with the W-3 filing.
3. Copy D is the Employer’s copy.
It should be noted that while it is still technically possible to file paper based W-2 and W-3 forms, it is anticipated that support for paper filings will likely be eliminated
in the near future.
• W-2’s due to employees by January
31
• W-2 and W-3 filings e-filing due to
Social Security by January 31
• Schedule H must be completed by
January 31, unless it is a stand-alone
filing
Form Schedule H must be completed and used on
the employer’s 1040 income tax return. While there is
no technical deadline for the completion of this form, it
must be made available for the completion of the employer’s income tax filing, due by April 15.
28
29
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
»» Bill Title: An act to amend the labor law, in relation to
establishing the Wage Theft Prevention Act
NEW YORK STATE TAX
AND EMPLOYMENT
OBLIGATIONS
I
f you hire household help, your responsibilities as
employer include reporting and filing requirements
mandated by law. These will be discussed further
down in this section.
Before going into the details associated with state tax
and labor compliance, it is important to know that there
are two pieces of legislation in New York State that govern employment in the household. They are:
Domestic Worker Bill of Rights – Bill Number S2311E
»» Bill Title: An act to amend the labor law, the executive
law and the workers’ compensation law, in relation to
establishing regulations regarding employment of domestic workers including hours of labor, wages and
employment contracts.
Wage Theft Prevention Act – Bill Number S8380-2009
30
»» Purpose or General Idea of Bill: The Wage Theft Prevention Act (WTPA) seeks to expand the rights of employees to seek civil and criminal avenues of remedy
for their employers failing to follow labor law appropriately and the specifications therein.
DOMESTIC WORKER BILL OF RIGHTS
Here is a summary of the Domestic Worker Bill of
Rights provisions, which took effect on November 29,
2010:
The most important part of this legislation is that New
York State has redefined the term domestic worker,
from the federal definition. Under this law, a “domestic
worker” is defined as a person employed in a home or
residence for the purpose of:
a. caring for a child;
b. serving as a companion to a sick, convalescing, or
elderly person;
c. housekeeping; or
d. for any other domestic service purpose.
Furthermore, the modification of the term “Domestic
Worker” excludes someone who:
a. works on a “casual basis” (which term is not defined
in the statute);
31
Call 646-827-3600 For a Free Consultation
b. is a relative through blood, marriage, or adoption of
the employer or of the person for whom the worker
is delivering services under a program funded or administered by federal, state, or local government; or
c. provides “companionship services,” as that term
is defined in the federal Fair Labor Standards Act
(FLSA), and who is employed by any entity other
than the family or household (e.g., a third-party
employer or agency).
FLSA regulations define “companionship services” as
“those services which provide fellowship, care, and protection for a person who, because of advanced age or
physical or mental infirmity, cannot care for his or her
own needs. Such services may include household work
related to the care of the aged or infirm person such as
meal preparation, bed making, washing of clothes, and
other similar services [and] may also include the performance of general household work provided, however,
that such work is incidental, and does not exceed 20 percent of the total weekly hours worked.”
1. Overtime: The bill provides overtime for hours
worked over 40 in a week by a live out (come and go)
domestic, and overtime over 44 for live in domestics.
2. The companionship exemption provided in the
FLSA is retained in the NYS legislation (See additional comments below on this).
3. Worker’s Compensation Insurance is required for
household employment when the domestic worker
32
An Educational Publication of Redlig Financial Services Inc.
(nanny, housekeeper, home health aide) works 40
or more hours on an average week.
4. The domestic worker must have one 24-hour period per week off from work, but may agree to work
that 7th day. In this case the 7th day work must be
compensated at the overtime rate (apparently no
matter the total hours worked in the 7-day week).
5. After one year of service, a domestic employee is
entitled to 3 paid days of leave (sick, vacation, personal, etc.) at the regular rate of compensation.
6. Anti-discrimination provisions are included to protect the domestic employee from sexual or verbal
harassment and abuse.
A simple question will inevitably come up: Do I need
to pay my home health aide or housekeeper minimum
wage and overtime pay?
In New York State, the simple answer is YES. New York
State has overridden the Federal exemptions, effectively
mandating that domestic
NYS MINIMUM WAGE
employees must be paid
minimum wage for the
The minimum wage in
first 40 hours of work (or
New York State differs by
44 hours in certain circounty and is increasing
cumstances), and then
every year until the
overtime, defined as one
mandated rate of $15.00
and a half times the base
is achieved.
rate of pay, for any hours
worked thereafter.
33
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
Working hours are defined as all hours on duty, including meal time and sleep time if the employee is required
to remain at the premises. In general, hours worked includes all time that the employee is required to be at
the employer’s home and all time that the employee is
required to be ‘on call’ in the course of his/her duties.
»» Allowances (including tip, meal, or lodging allowances),
if any, claimed as part of the minimum wage;
WAGE THEFT PREVENTION ACT
The New York Wage Theft Prevention Act (the “Act”) became effective on April 9, 2011. The legislation deals primarily with an employer’s obligation to give employees
notice of their pay rate and payday, wage statements,
and retention of payroll records, and sets forth penalties
for non-compliance. The following is a summary of the
changes made to the Labor Law by the Act.
Notice of Pay Rate and Payday: Employers must provide each employee with a written notice (in English and
in the language identified by the employee as his or her
primary language at the time of hiring) pertaining to pay
rates and paydays at the time of hiring. The notice, the
form of which will be prepared by the New York State
Department of Labor (NYDOL) and posted on the NYDOL’s website, must include the following:
»» The rate or rates of pay and the basis of the rate (including overtime rates if the employee is not exempt
from overtime compensation), whether paid by the
hour, shift, day, week, salary, piece, commission, or by
another method;
34
»» The regular pay day designated by the employer;
»» The name of the employer, and any “doing business
as” names used by the employer;
»» The physical address of the employer’s main office or
principal place of business and the mailing address, if
different; and
»» The telephone number of the employer; and
»» Such other information as the NYDOL deems material
and necessary.
NOTICE OF ACKNOWLEDGEMENT
OF PAY RATE AND PAYDAY
Whenever such notice is provided to an employee, the
employer must obtain from the employee a signed and
dated written acknowledgment of receipt of the notice,
which acknowledgment must also include an affirmation
by the employee that he or she identified his or her primary language to the employer and that he or she received a copy of the notice in such language. Each such
notice and acknowledgment must be retained by the
employer for at least six years or three years after employment has been terminated.
The Act requires the NYDOL to prepare dual language
templates that comply with the above requirements. As
of the writing of this publication, the DOL template is
35
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
available in six languages (English, Spanish, Chinese, Haitian Creole, Polish and Korean). If the employee identifies
a language for which a template is not available from the
NYDOL, the employer is only required to provide an English language notice or acknowledgment. Employers are
not subject to penalty for any errors or omissions in the
non-English portion of any notice provided by the NYDOL.
ee in writing of any change to the information described
in the bulleted items above at least seven calendar days
prior to the time of such change, unless the change is
reflected on the wage statement described below.
Posting Requirements: The Act gives the Commissioner of Labor the power to require employers found to have
violated the wage payment laws to post a notice of the violation for a period not to exceed one year in an area visible
to employees, summarizing the violations found and other
information deemed pertinent by the Commissioner. If the
violation was willful, the Commissioner can require the employer to post such a notice in an area visible to the general
public for a period not to exceed 90 days.
Retention of Payroll Records: Employers must establish, maintain and preserve for not less than six years
contemporaneous, true, and accurate payroll records
showing for each week worked the hours worked as well
as the other information required to be included in each
employee’s wage statement, as described above.
Wage Statements: With every payment of wages, employers must provide each employee a statement that
includes, at a minimum, the following information:
The notice required under the Act replaces and expands
the October 2009 legislation that required only written notice of pay rates and pay days at the time of hire.
Notice of Important Changes: In addition to the notice, employers are also required to notify each employ-
»» The dates of work covered by the wage payment;
»» The name of the employee;
»» The name, address and phone number of the employer;
»» Gross wages;
»» Deductions;
36
37
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
»» The rate or rates of pay and basis thereof, whether
paid by the hour, shift, day, week, salary, piece, commission, or by another method;
A statement must be given with each payment of wages. The wage statement may be provided electronically, but workers must be able to access their statements
on a computer provided by the employer and be able to
print a copy for their records.
»» Allowances, if any, claimed as part of the minimum
wage; and
»» Net wages.
NEW YORK STATE WAGE
STATEMENT REQUIREMENTS
Domestic employees, considered from a legal classification as non-exempt employees, must have the following included on their pay statement: the regular hourly
rate or rates of pay; the overtime rate or rates of pay;
the number of regular hours worked; and the number of
overtime hours worked.
Retaliation: The Act amends the provisions of the Labor Law prohibiting retaliation against an employee for
action taken, or believed by the employer to have been
taken, by such employee with regard to Labor Law violations. In addition to the existing right to impose a civil penalty against the employer of between $1,000 and
$10,000, such civil penalty may be imposed against the
person who retaliated, and the Commissioner may now
also order injunctive relief, liquidated damages against
the employer or such person of up to $10,000, rehiring
or reinstatement to a former or equivalent position and
an award of lost compensation or an award of front pay
in lieu of reinstatement and an award of lost compensation. Any employer or his or her agent, or the officer or
agent of any corporation, partnership, or Limited Liability Company (LLC), or any other person who is convicted of violating the anti-retaliation provisions of the Law
shall be guilty of a class B misdemeanor.
Penalties for Noncompliance: Not surprisingly, penalties for violation of the Labor Law have been increased
significantly by the Act, as follows:
»» An employee who is not provided the notice of pay rate
and payday described above within 10 business days
38
39
Call 646-827-3600 For a Free Consultation
of his or her hire date may recover damages of $50 per
work week with a maximum amount of $2,500.
»» An employee who is not provided the wage statement
described above may recover damages of $100 per
work week with a maximum amount of $2,500.
EMPLOYER REGISTRATION IN NEW YORK STATE
You must register as an employer in New York State if:
1. You pay cash wages totaling $500 or more in a calendar quarter, or
2. You pay less than $500 cash wages in a calendar
quarter and you choose to cover your employee(s)
for unemployment insurance, or
3. You and your employee(s) agree to withhold New
York State income tax from your employee’s wages.
The form used to register as a New York State employer is the NYS-100, which is available in either paper format or electronically, via the NYS Department of Labor
website. The form will also generate an Unemployment
Insurance identification number, since you will be required to pay unemployment insurance.
When you register as an employer, you are required
to indicate the quarter you expect to begin employment.
The date specified on the form is when New York State
will expect you to file an NYS-45 Quarterly Combined
Withholding, Wage Reporting, and Unemployment Insurance Return. This form is due on the last day of the
40
An Educational Publication of Redlig Financial Services Inc.
month following a calendar quarter. If that due date falls
on a Saturday or Sunday, the form is due on next business day. If the form is not filed by the expected date, it
will automatically trigger a “Failure to File” notice from
New York State, to which you will have to provide a written response.
NEW HIRE REPORTING
All employers must report to the New York State Department of Taxation and Finance information about
newly hired or rehired employees within 20 days of the
hiring date. The required information on each employee
includes:
»» Employee Name (First, Middle Initial, Last)
»» Employee Address (Street, City, State, Zip Code)
»» Employee Social Security Number
»» Employee Hire Date
»» Employer Name
»» Employer Address (Street, City, State, Zip Code)
»» Your Employer Identification Number (EIN assigned by
IRS)
»» Indicate if dependent health insurance benefits are
available, and if so, the date the employee qualifies for
these benefits
41
Call 646-827-3600 For a Free Consultation
You can provide new hire information online (https://
www.nynewhire.com/index.jsp) or by submitting a copy
of the employee’s federal Form W-4 to:
New York State Department of Taxation and Finance
New Hire Notification
PO Box 15119
Albany, NY 12212-5119
Fax: (518) 320-1080
If the W-4 is submitted as the evidentiary document,
you will also be required to submit additional information to show the availability of dependent health insurance information (and eligibility) to your employee.
UNEMPLOYMENT INSURANCE
As part of registering as a new employer in New York
State, you are assigned an Unemployment Insurance
(UI) contribution tax rate of 3.925% (for 2017) and a
re-employment service find rate of .075%, for a combined unemployment insurance contribution rate of
4.0%. You pay unemployment insurance contributions
up to the unemployment wage limit of each employee’s
earnings during each calendar year.
The UI contribution rate is amended every year, in
March, based upon the following factors:
»» Amount of time you have been subject to unemployment insurance law,
42
An Educational Publication of Redlig Financial Services Inc.
»» Timeliness of your quarterly tax reports,
»» The prompt payment of your taxes, and
»» The balance in the State Insurance Trust Fund (an insolvent Trust Fund may negatively affect your tax rate).
New York State
sends you a notice
annually, of your UI
contribution rate, regardless of whether
your rate changes
or not. This annual
notification occurs in
advance of the first
quarter filing of your
quarterly reports. In
addition, Unemployment Insurance law
forbids you to deduct any part of your
unemployment insurance contribution
from an employee’s
pay. This is an employer cost.
ANNUAL UNEMPLOYMENT INSURANCE
WAGE LIMIT /PER EMPLOYEE COST
(ASSUMES COMBINED RATE OF 4.0%)
Year
Wage Limit Per Employee Cost
2017$10,900
$436.00
2018$11,100
$444.00
2019$11,400
$456.00
2020$11,600
$464.00
2021$11,800
$472.00
2022$12,000
$480.00
2023$12,300
$492.00
2024$12,500
$500.00
2025$12,800
$512.00
2026$13,000
$520.00
PLEASE NOTE THAT THESE RATES
AND CALCULATIONS ARE SUBJECT
TO CHANGE BY THE NEW YORK
STATE DEPARTMENT OF LABOR
Please note that NYS-45 Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance
forms due on or after April 30, 2015 must be electronically filed.
43
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
WITHHOLDING TAX REMITTANCE REQUIREMENTS
ple reason that New York State does not want you holding their money. This remittance is processed with an
NYS-1 filing. If the annual withholding tax total exceeds
$15,000 in a calendar year, New York State will notify you
that the remittance requirement window will be reduced
from five business days to three business days.
As discussed earlier, employers are not legally required to withhold taxes from household employees’
paychecks, but we highly advise it. It will mitigate the
end of year sting that will arise for the employee when it
comes time for their tax return to be prepared. Accordingly, there are three types of withholding taxes within
New York State. They are as follows:
1. New York State withholding tax
2. New York City withholding tax
3. City of Yonkers withholding tax
The determination of what withholding taxes are applicable for an employee are based upon where the employee resides. The calculation of State and local income
taxes is determined by tax tables that are published
every year. The amount of taxes withheld is determined
by the elections specified on the employee’s completed
W-4 form filing. In the event that an employee wants to
elect a different withholding criteria from the federal tax
withholdings, the employee will need to complete and
IT-2014 New York State withholding tax form. Otherwise,
the completion of this form is not required.
Withholding taxes must be monitored with each payroll. Once the cumulative state withholding taxes (New
York State, New York City and City of Yonkers tax) exceed
$700 within a calendar quarter, you have five business
days to remit the money to New York State, for the sim44
Please note that New York State has mandated that
the remittance of all NYS employment taxes (Form NYS1) after April 30, 2015 must be electronically filed.
METROPOLITAN COMMUTER TRANSPORTATION
MOBILITY TAX (MCTMT)
Here’s a quick note on the MCTMT. The MCTMT tax
is imposed on certain employers and self-employed individuals engaging in business within the metropolitan
commuter transportation district. It includes 13 counties
within downstate New York including Manhattan (New
York), Bronx, Kings (Brooklyn), Queens, Richmond, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and
Westchester counties.
Since the withholding of state income taxes is voluntary on the part of household employees, the New York
State tax department has determined that household
employers are not subject to this tax.
45
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
WORKERS COMPENSATION AND
DISABILITY BENEFITS INSURANCE
The estimated cost of a disability insurance policy is $60
per year (for up to two employees).
If you employ a household employee who works 40 or
more hours per week, you are required to have a Workers Compensation insurance policy. The purpose of this
policy is to allow an employee to receive assistance while
they are unable to work due to an on the job injury.
An often misunderstood issue is the interaction of coverage for employees on a homeowner’s insurance policy.
A workers’ compensation insurance rider on a homeowner’s insurance policy within the State of New York does
not cover domestic employees for workers’ compensation benefits. Furthermore, if a homeowner (employer)
wishes to voluntarily cover domestic employees working
less than 40 hours a week, the homeowner (employer)
must purchase a separate, standard workers’ compensation insurance policy to cover those employees (Section 3420(j) of the New York State Insurance Law).
There is an exclusion written into NYS Workers’ Compensation law for any household employee who does
not work 40 hours per week, but even though not legally
required, it is still advisable to have this policy in place.
Under disability benefits law, a live-in domestic worker
means that the worker lives and sleeps in the employer’s
premises. Live in domestics are considered to be working while they are at the work location, even if they are
not being paid for all their time. For example, if you hire
a domestic employee to be in your home from 6:00pm
Friday – 6:00pm Sunday, this would be classified as 48
hours of work under the disability insurance policy since
they are on the premises for this time, regardless of the
number of hours they are paid while on the premises.
While it is possible to purchase both workers’ compensation and disability insurance policies via a private insurance company, it is far more cost advantageous to
obtain this policy through the New York State Insurance
Fund. The estimated cost of a workers’ compensation
policy is approximately $750 per year, per employee.
46
PENALTIES FOR NON-COMPLIANCE
The following is a list of penalties that can be imposed
as a result of non-compliance with state laws:
1. Failure to Report Newly Hired or Rehired Employees and/or Failure to Provide Required Information
2. Failure to Report State Income and Unemployment
Taxes
»» Failing to file a quarterly Form NYS-45 could result in a penalty of $1,000. The Department of
Taxation will send you a notice of your failure to
file and give you 30 days to submit Form NYS-45
to avoid paying a penalty. If the filing is late, you
47
Call 646-827-3600 For a Free Consultation
will receive a late payment penalty of $50 plus interest.
»» Under certain circumstances, it may be possible
to avoid paying a penalty due to pending legal
proceedings. One such example is when the employer dies, and the letters testamentary are not
yet approved by the court.
An Educational Publication of Redlig Financial Services Inc.
Appeal Board
PO Box 15126
Albany, NY 12212-5126
»» Any person who fails to file, with the intention
of avoiding payment, is guilty of a misdemeanor
and subject to a fine of up to $10,000.
3. Failure to obtain Workers’ Compensation and Disability Insurance can carry significant fines. The
Workers’ Compensation Board (WCB) has a specific
procedure for dealing with employers without coverage, and it is important to fully understand this
process in order to avoid cumbersome fines.
»» The penalty, under section 581.2(b) of the Unemployment Insurance Law, for failure to file a return is 5% of the unemployment insurance contribution due for each month the return is late,
up to 25%. The penalty may be no less than $100.
»» To ensure that all employers are covering their
employees, the WCB gathers information from
various agencies to establish a database of all
businesses in New York, including individuals
who employ domestic workers.
»» If you contest a penalty assessed against you or
you disagree with your unemployment insurance
tax rate or claim judgment, you may formally request a hearing within 30 days of receiving notification with an administrative law judge. Send a
written letter to the office that issued the determination.
»» Once the database is established, it is updated
by workers’ compensation coverage information
sent to the WCB by insurance carriers.
If you are dissatisfied with the judge’s ruling at the
hearing, you then have 20 days to appeal to the Unemployment Insurance Appeal Board provided you appeared or were represented at the hearing. Appeals may
be sent to:
48
»» The WCB is notified whenever an insurance policy is written, modified, or canceled by an insurance carrier.
»» If the WCB notices that an employer does not
have coverage for a period of time, it will send
out a written notice to the employer requiring
information on how the employer is complying
with the mandatory coverage provision of the
49
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
law—if the employer has secured coverage or is
exempt from the law.
»» If no response is received, the employer will be
levied a $2,000 fine for every 10-day period of
non-coverage, up to $72,000 for the year.
»» Once the WCB levies penalties, the employer has
30 days from the date of the initial penalty to appeal the decision. Information on how to appeal
can be found on the back of the penalty notice.
FREQUENTLY ASKED
QUESTIONS (FAQ)
»» If the employer has still not paid or responded to
the penalty notice after roughly three months, it
then goes to a collection agency.
»» If the collection agency is unsuccessful in collecting the penalty, the WCB will issue a judgment
against the employer.
4. Failure to File Quarterly NYS-45
»» $50 penalty for late payments made after the
due date
»» Interest assessed on late payment of the withholding taxes due
»» Interest assessed on late payment of the unemployment insurance tax due
QUESTIONS ON FEDERAL LABOR
AND EMPLOYMENT LAWS
How much extra does it cost to employ someone legally?
The following table is meant to provide a true estimate of
the cost of employment. The figures include both federal
and New York State costs, inclusive of workers’ compensation and disability insurance policy costs.
Number of Employees - *
Annual
Gross Salary
Annualized Employment Cost - *
1
2
3
1
2
3
$35,000
11.51%
15.20%
18.94%
$39,030
$40,322
$41,629
$45,000
10.65%
13.53%
16.43%
$49,795
$51,087
$52,394
$60,000
9.90%
12.06%
14.24%
$65,942
$67,234
$68,541
$90,000
9.15%
10.59%
12.04%
$98,237
$99,529
$100,836
$120,000
8.78%
9.85%
10.94%
$130,532
$131,824
$133,131
$150,000
8.55%
9.41%
10.28%
$160,240
$163,905
$165,102
*- Please note that these figures assume minimum worker turnover, limiting contributions into the state unemployment insurance fund. In addition, the cost of payroll administration services is not factored into these calculations.
50
51
Call 646-827-3600 For a Free Consultation
How do I determine if a worker is legally permitted to
work in the United States?
The only way to validate employment eligibility is for
the employee to complete Form I-9, Employment Eligibility Verification (https://www.uscis.gov/system/files_
force/files/form/i-9-paper-version.pdf?download=1)
with the required evidentiary documentation.
Am I required to withhold Social Security and Medicare
tax from household employees?
An Educational Publication of Redlig Financial Services Inc.
5. How is the scheduling determined?
The goal is to determine how much control the worker
has in performing her tasks and the amount of time she
spends at your residence. The greater the control and
the amount of time on site, the more likely she can be
considered an employee. These concepts are tightly correlated together.
How do I calculate Social Security and Medicare taxes?
In order to get to the right answer, there are a number of additional questions that must be asked to better
understand the work arrangement. As the questions get
answered, the path becomes clearer. The questions are
as follows:
If you pay cash wages of $2,000 or more (this threshold
can change from year to year) to any one household employee, you generally must withhold 6.2% for Social Security and 1.45% for Medicare taxes (for a total of 7.65%)
from all cash wages you pay to that employee. Social Security and Medicare taxes must also be matched by the
employer, so you must also contribute your share of Social Security and Medicare taxes, which is another 7.65%
of cash wages. Unless you prefer to pay your employee’s
share of Social Security and Medicare taxes from your
own funds, you should withhold 7.65% from each payment of cash wages made.
1. How many days a week is the cleaning lady coming
to your home?
Is there a minimum reporting threshold for issuing a W-2
to an employee?
Social Security and Medicare taxes are a required withholding taxes and must be withheld from all employees
after the year to date gross pay within a calendar year
exceed $2,000.
Do I have to put my cleaning lady on the payroll?
2. Is someone home providing her with clear instructions as to what cleaning tasks to perform?
3. Does she have other people that she works for?
There is no minimum reporting threshold for the issuance of a W-2. All employees must receive a W-2 regardless of the amount of income they earn.
4. Does she bring her own cleaning supplies and
equipment (such as vacuum cleaner)?
52
53
Call 646-827-3600 For a Free Consultation
Can the employer pay the employee’s share of Social
Security and Medicare tax?
If you prefer to pay your employee’s Social Security
and Medicare taxes from your own funds, do not withhold them from your employee’s wages. However, they
must be included in the employee’s wages for income
tax purposes.
Can I employ someone using the Companionship
Exemption Rules?
The companionship exemption allows an employer in
certain circumstances to bypass the requirements to pay
an hourly rate of pay for household employees. This exemption is written into the Fair Labor Standards Act and
was the basis for the industry to use a daily rate of pay.
Recent legislation has restricted the type of work that
qualifies under the exemption.
When is it appropriate to pay someone using a Form
1099-MISC?
The requirement to issue a Form 1099-MISC applies
to income earned by individuals who are self-employed
or to small businesses. Some examples of independent
workers who provide services in the household include
geriatric care managers, nurses, attorneys and accountants. Under these circumstances, their income is considered Nonemployee compensation and reported on Box
7 of Form 1099-MISC.
54
An Educational Publication of Redlig Financial Services Inc.
It is very important to understand that a worker who
comes in and takes work instruction in the household
does not meet the criteria as independent and does not
qualify as an independent worker. They are considered
employees, regardless of the duration of employment
even if it’s only for a few days.
What are the reporting requirements for issuing a Form
1099-MISC?
All payments over $600 must be reported on Form
1099-MISC.
What is the penalty for filing Form 1099 late?
Form 1099-MISC must be provided to the recipient
by the first business day of February after the calendar
year. The 1099-MISC must be mailed to the Internal Revenue Service by the first business day of February after
the calendar year. If the form is filed electronically, the
deadline is extended until February 28.
A request can be made for a 30-day extension in filing
1099’s by completing IRS Form 8809, but that extension
is only for filing the 1099 with the IRS. It does not provide
additional time to provide the 1099 to the recipient.
The following penalties are in effect for late filings of
Form 1099-MISC:
»» $30 penalty for filing a 1099 not more than 30 days
late;
55
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
»» $60 penalty for filing a 1099 more than 30 days late
and before August 1;
QUESTIONS ON NEW YORK STATE
EMPLOYMENT AND LABOR LAWS
»» $100 penalty for filing a 1099 on or after August 1;
Can I pay my employee a daily rate of pay?
»» $250 penalty for intentional failure to file.
Household employees are classified as non-exempt
employees. As such, they must be paid an hourly rate of
pay. While it may be possible to discuss daily rates of pay
as part of an employment discussion, it cannot be presented or structured this way on their weekly wage statement. Likewise, if an employee’s work schedule changes
from week to week, it is not permissible to continuously
change the hourly rate of pay to adhere to a daytimes
daily rate calculations.
Are there any tax benefits I can take advantage of?
Certain household employment situations may be
deemed medically necessary, such as caring for an aged,
infirm or incapacitated person. As such, the total cost of
payroll and associated compliance requirements including workers’ compensation, disability, and payroll costs
may be permissible as a medical expense. Please consult
with your tax advisor for more details and eligibility requirements.
What is the legal definition of a live-in employee?
The legal definition of a live-in employee is an employee whose legal domicile (address) is that of the employer.
This means the employee has no separate independent
residence from the employer, an important distinction
when it comes to overtime.
What is the definition of a live-in employee and what
special rules exist for them?
A live-in employee is defined as someone who resides
in the house where he or she works. Families mistakenly
believe that someone that lives in the house 3, 4, or 5
days are legally defined as live-in employees. This is actually not the case. The definition of a live-in employee is
someone whose legal residence is the same as the residence of the employer.
When an employee meets the legal definition of a livein, there is a rule that applies to them as to when overtime begins.
56
57
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
What are the rules regarding Overtime?
Are there any benefits that I must pay?
Overtime is defined as time and a half the employees
base rate of pay and must be paid after 40 hours (or 44
hours under certain circumstances) of work within a given work week. There are no exceptions to this rule.
Benefits can be broken down into different components: Vacation Pay; Sick Pay; Holiday Pay; and Medical
Insurance. New York State law requires that employees
must receive three paid days’ pay after completing their
first full year of employment. The law does not distinguish between whether the three days of pay be vacation or sick/personal days. However, employers of New
York City are required to provide two paid sick days after
completion of 120 days of regular employment, for a total benefit of five paid days of pay.
How many hours a day do I have to pay for a live-in
employee? Do I have to pay for sleep time?
The simple answer to this question is that an employee is entitled to receive pay for all the hours worked.
There are a number of variables that contribute to the
answer, such as how much uninterrupted sleep time an
employee receives and whether the employee resides in
a separate private room in the residence of the employer. Another important consideration is how many times
an employee is expected to awake in the night for the
employer vs. interrupted sleep time. The legal minimum
daily amount an employee can receive is 13 hours of pay
per day, and of course the maximum is 24 hours. The
true answer must be determined on a case by case basis.
How often must I pay an employee?
New York State law mandates that all household employees must be paid on a weekly basis and must also
receive a wage statement (paystub) showing all deductions and withholdings as part of their weekly pay.
58
Holiday pay is not legally required but often necessary
to remain economically competitive in the workplace. It
is common for household employees to receive holiday
pay for New Year’s Day, Memorial Day, July 4th, Labor
Day, Thanksgiving Day, and Christmas Day. Holiday pay
is defined as paying an employee for time and a half of
their regular base rate of pay.
Household employers are not required to provide
medical insurance to their employees.
Can I pay someone a daily rate (instead of an hourly rate
of pay)?
The Domestic Worker Bill of Rights mandates that all
household employees must be paid an hourly rate of
pay and overtime after 40 hours (or 44 hours under certain circumstances) of work in a seven-day work week.
59
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
What is the minimum wage in New York State?
In April 2016, New York State has adopted a statewide
$15 minimum wage plan as part of the 2016-2017 state
budget. The implementation of this is determined on
a county by county basis, with New York City being the
first to reach $15 on 12/31/2018. Other counties have a
more graduated increase and implementation of minimum wage. The details on this can be found at the New
York State Department of Labor website at: https://labor.ny.gov/workerprotection/laborstandards/workprot/
minwage.shtm. In addition, the New York State Department of Labor also provides a minimum wage lookup
tool to better assist you with this.
RESOURCES
FEDERAL FORMS AND PUBLICATIONS
IRS Publication 926:
http://www.irs.gov/pub/irs-pdf/p926.
Household Employer’s Tax Guide
pdf
Form SS-4: Application for Employer
http://www.irs.gov/pub/irs-pdf/fss4.
Identification Number
pdf
Form I-9:
https://www.uscis.gov/system/files_
Employment Eligibility Verification
force/files/form/i-9-paper-version.
pdf?download=1
Form W-2: Wage and Tax State
http://www.irs.gov/pub/irs-pdf/fw2.pdf
Form W-4: Employee’s Withholding
http://www.irs.gov/pub/irs-pdf/fw4.pdf
Allowance Certificate
Form W-3: Transmittal of Wage and
http://www.irs.gov/pub/irs-pdf/fw3.pdf
Tax Statements
Form Schedule H:
http://www.irs.gov/pub/irs-pdf/
Household Employment Taxes
f1040sh.pdf
FEDERAL PHONE NUMBERS
Internal Revenue Service (IRS):
(800) 829-4933
Business & Specialty Tax Line
US Department of Labor: http://www.
(866) 487-2365
dol.gov/whd/homecare/
60
61
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
NEW YORK STATE FORMS AND PUBLICATIONS
NEW YORK STATE PHONE NUMBERS
Form NYS-45: Quarterly Combined
Withholding, Wage Reporting, and
Unemployment Insurance Return
http://www.tax.ny.gov/pdf/current_
forms/wt/nys45_fill_in.pdf
New York State Department of Taxation and Finance:
Department of Labor:
Form NYS-100: NYS Employer
Registration for Unemployment
https://www.labor.ny.gov/formsdocs/ui/
General Inquiries:
Insurance, Withholding, and Wage
nys100.pdf
Individual Unemployment Insurance
Claim Assistance
Reporting
Form IT-2104: Employee’s
Withholding Allowance Certificate
(NYS)
NYS-1: Return of Tax
http://www.tax.ny.gov/pdf/current_
forms/it/it2104_fill_in.pdf
Bureau of Compliance
pdf
NYS Tax Bulletin MU-350: Hiring
http://www.tax.ny.gov/pdf/tg_bulletins/
Household Help
mu/b15_350mu.pdf
Guide to Unemployment Insurance,
Wage Reporting, and Withholding
Wage Theft Prevention Act
Domestic Workers’ Bill of Rights
www.labor.ny.gov
(888) 469-7365
(Within NY)
(888) 209-8124
(Outside NY)
(877) 358-5306
www.nysif.com
Workers Compensation
Workers Compensation Board:
https://labor.ny.gov/formsdocs/ui/IA98.
Publication NYS-50: Employer’s
Disability Benefits Insurance
forms/wt/nys1_fill_in.pdf
Unemployment Insurance Tax Rates
(518) 485-6654
New York State Insurance Fund:
http://www.tax.ny.gov/pdf/current_
Form IA 98: Notice of
www.tax.ny.gov
Withholding Tax Information Center
www.wcb.ny.gov
http://www.tax.ny.gov/pdf/publications/
withholding/nys50.pdf
https://labor.ny.gov/formsdocs/wp/
P715.pdf
https://labor.ny.gov/legal/domesticworkers-bill-of-rights.shtm
Labor Rights and Protections for
https://labor.ny.gov/formsdocs/
Domestic Workers
factsheets/pdfs/P712.pdf
https://www.labor.ny.gov/
NYS Department of Labor Notice of
workerprotection/laborstandards/
Pay Rate
employer/wage-theft-prevention-act.
shtm
62
63
(866) 697-4332
(888) 875-5790
(877) 632-4996
(866) 298-7830
Call 646-827-3600 For a Free Consultation
An Educational Publication of Redlig Financial Services Inc.
DISCLAIMER
Nothing contained in this guide constitutes tax advice,
and any discussion of tax matters is not intended to be
used, and cannot be used, to avoid tax penalties and may
not be used in the promotion, marketing or recommendation of any entity, investment plan or arrangement.
QUESTIONS
If you still have questions, please call for a complimentary phone conversation with any of our household
employment experts. I’m sure you will feel it is time well
spent.
ONLINE TOOLS AND RESOURCES
Please visit www.myfamilypayroll.com for additional
online tolls, such as payroll calculators, whitepapers and
other helpful information.
ABOUT REDLIG
FINANCIAL SERVICES INC.
A
s an accounting and financial services firm,
Redlig Financial Services Inc. has automated
the household employment process, which this
book describes in detail. We offer a complete and highly personalized family oriented employment and compliance solution.
Our clients rely on our team to provide an integrated
approach to employment, tax planning and tax preparation with guidance and advisory services layered
throughout the process.
While tax returns are a necessity, we pride ourselves
on the personal relationships we foster with each one of
our clients, which allows us to be more aware of each client’s unique tax situation. Each client works with an owner of the firm (or more than one owner depending on the
circumstances).
64
65
Reproduction or reuse of this document without permission is strictly prohibited.
The Offices of
Redlig Financial Services Inc.
New York City: (646) 827-3600
White Plains: (914) 946-7725
Long Island: (516) 935-3950
www.redlig.com
www.myfamilypayroll.com
REDLIG
FINANCIAL SERVICES
REASSURANCE THROUGH LIFE´S JOURNEY
REDLIG
MY FAMILY
PAYROLL
FINANCIAL SERVICES
REASSURANCE THROUGH LIFE´S JOURNEY
REASSURANCE THROUGH LIFE´S JOURNEY