Find out what your federal and state obligations are when hiring household help. Click here for more information on what constitutes being a household employer.
Am I a Household Employer?
You are a household employer if you pay someone to perform household work and that worker is your employee. Household work is work done in or around your home by baby-sitters, nannies, health aides, private nurses, maids, caretakers, yard workers, and similar domestic workers.
A household worker is your employee if you can control not only what work is done, but also how it is done. If the worker is your employee, it does not matter whether the work is full-time or part-time, or if you hired the worker through an agency or from a list provided by an agency. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.
If only the worker can control how the work is done, the worker is not your employee but is considered self-employed. A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business. If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee.
At the federal level, there are generally three taxes that a household employer may be responsible for paying. They are Federal Insurance Contributions Act (FICA) taxes (Social Security and Medicare), the Federal Unemployment Tax (FUTA), and federal income tax. The Social Security tax pays for old age, survivors, and disability benefits. The Medicare tax pays for hospital insurance. FUTA taxes pay unemployment compensation to workers who lose their jobs.
At the state level, there are three taxes that a household employer may be responsible for paying. They are unemployment insurance, through the Department of Unemployment Assistance (DUA); workers’ compensation insurance, through the Department of Industrial Accidents (DIA); and state income tax, through the Department of Revenue (DOR). Money collected by DUA goes directly into a trust fund from which benefits are paid to qualified claimants. Workers’ compensation is a system of insurance that protects employees if they are injured on the job or contract a work-related illness.