HOMEWORK SOLUTIONS IS HERE TO HELP!
Payroll tax compliance for your new employee does not need to be terrifying, time consuming or expensive. HomeWork Solutions is a nationally recognized “household payroll” service company, providing household employers nationwide with trusted and time saving payroll and payroll tax solutions.
WORKER CLASSIFICATION IS THE KEY
You become a household employer when you hire an individual to perform duties and provide services under your direction in your private home. Generally, these workers are your employees, not independent contractors. Failure to properly classify the worker and make the appropriate employment tax filings and payments is considered tax fraud by the IRS.
PAYROLL TAX RESPONSIBILITIES
You are responsible for federal employment taxes when you pay household workers as little as $1,000 in a calendar quarter or when you pay any individual employee age 18 or over $2,800 in a calendar year.
You have both Federal and State tax filing responsibilities. Federal employment taxes are reconciled with the household employer’s annual Federal Income tax return. Your state may require quarterly unemployment tax filings, as well as reports and remittance of state income taxes withheld, if applicable. Employee wages are reported to the Social Security Administration. Your employee is due a W-2 form in January.
Social Security and Medicare Taxes
The household employer is responsible for the payment of all Social Security and Medicare taxes to the IRS. You may choose to either collect your employee’s taxes via payroll deductions or fund these taxes yourself.
Unemployment Taxes
You will make contributions to the IRS and Oregon to fund unemployment and worker re-training programs.
Income Taxes
Federal and state income taxes are ultimately the responsibility of the household employee; however, best practice is to deduct these taxes from your full time employee’s wages to help them avoid owing large sums when they file their annual income tax returns.
OTHER LEGAL RESPONSIBILITIES
Verification of Work Eligibility
All U.S. employers are required to verify a candidate’s employment eligibility using Form I-9.
Fair Labor Standards Act (FLSA) Compliance
Maintain accurate and contemporaneous records including time tracking, gross pay calculations, and detailed records of all deductions from the employee paycheck.
Pay no less than minimum wage on an hourly rate basis.
Health Insurance
You are not required to provide employee health insurance, however there are financial and retention advantages to contributing some or all of your employee’s health insurance premium. HWS is happy to discuss this with you.
OREGON LABOR LAWS
Minimum Wage
Oregon defers to the FLSA, which requires that all domestics, excluding companions, be paid at no less than the federal minimum wage.
Oregon minimum wage requirements vary by county. There is an interactive map on the official government website which may help you to identify what the minimum wage is where you live.
- $15.05/hr is the standard Oregon minimum wage. This applies to Benton, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco, Yamhill, and parts of Clackamas, Multnomah, & Washington outside the urban growth boundary.
- $16.30/hr is the minimum wage for the Portland metro area. This applies to areas within the urban growth boundary, including parts of Clackamas, Multnomah, and Washington
- $14.05/hr is the minimum wage for the non-urban area. This applies to Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler
Overtime Pay
In Oregon, live-out household employees must be paid 1.5× their hourly wage for hours worked over 40 in a week; live-in employees (excluding companions) earn overtime after 44 hours. Overtime isn’t required for working over 8 hours in a day or on weekends/holidays. Employers must provide 24 consecutive hours of rest each workweek—if the employee works on that day, all hours must be paid at the overtime rate. Live-in workers must receive at least 8 hours of rest daily with adequate sleeping conditions; if rest is interrupted by work, that time must be paid at the overtime rate.
Paid Time Off
Personal Days
Under Oregon’s Domestic Workers’ Bill of Rights, a household employee who averages 30 hours per week and has completed one year of service must receive three paid personal leave days per year. If your employment agreement or policies do not specifically address paid leave, you are required to pay out any accrued vacation time when employment ends.
Paid Leave Oregon
Paid Leave Oregon is a state-run program that provides up to 12 weeks of paid leave in a 52-week period, with an additional two weeks available for pregnancy or childbirth-related health needs. Beginning January 1, 2025, employees may also take leave for the legal process of adoption or foster placement. The program is funded through a payroll tax of 1% of employee wages, split between employer (40%) and employee (60%). Household employers with fewer than 25 employees are exempt from the employer portion but must still withhold and remit the employee’s contribution.
Paid leave can be used for three types of situations: family leave, medical leave, and safe leave. Family leave covers caring for a family member with a serious illness or injury or bonding with a new child through birth, adoption, or foster placement. Medical leave allows employees to care for their own serious health condition. Safe leave is available to survivors of domestic violence, harassment, stalking, sexual assault, or bias crimes. Wage replacement while on leave varies based on income, and some employees may receive up to 100% of their wages.
Domestic Workers Bill of Rights (DWBR)
Oregon law provides important protections for domestic workers. Employees must receive at least 24 consecutive hours of rest each workweek. If they work during their designated rest day, they must be paid overtime for all hours worked. Live-in workers must receive at least eight hours of uninterrupted sleep during a 24-hour period and be provided a suitable sleeping space. All household employees are entitled to overtime pay at one-and-a-half times their regular rate for hours worked over 40 in a week (or 44 for live-in employees). After one year of averaging 30 or more hours per week, workers must receive three paid personal leave days annually.
Domestic workers also have the right to prepare their own food in the home, subject to reasonable restrictions based on the residents’ religious or medical needs. They are protected from harassment and discrimination based on gender, race, national origin, religion, disability, and sexual orientation under Oregon law.
These protections do not apply to occasional babysitters, independent contractors, or in-home caregivers for seniors or people with disabilities.
Mileage Reimbursement
The federal government establishes and updates a maximum rate for non-taxable mileage reimbursement each year. The current rate is $0.70 per mile.
Payroll Frequency
Oregon requires that all household workers be paid daily, weekly, bi-weekly, semi-monthly or monthly. Pay upon involuntary separation is due on the next business day; upon voluntary separation within 5 business days.
Payroll Documentation
Oregon requires all employers to provide itemized pay stubs for each wage payment. HWS’ Complete Payroll Services fully satisfy Oregon’s pay stub law.
Employment Contract Requirements
Oregon does not have employment contract requirements. However, a free sample work agreement can be found here.
Workers’ Compensation Insurance
Oregon does not require household employers to obtain Workers’ Compensation Insurance. However, HWS ALWAYS recommends obtaining a Workers Compensation Insurance policy for the protection it provides in the event of a work-related injury sustained by your employee. A policy can usually be obtained easily and cost effectively by contacting your Homeowner’s or Renter’s Insurance provider. HWS can help you obtain this insurance through our insurance partner (just give us a call).
State Unemployment Insurance
Oregon requires a new employer state unemployment insurance tax of 2.4% for the first $35,700 wages paid to each employee. This may vary if you have previous employees.
Frequency of Tax Filings
Oregon requires quarterly tax filings for unemployment insurance taxes and income tax withholdings.
HWS WILL HELP YOU DO THE RIGHT THING
HWS knows that most families want to pay their household employees legally and ensure that the employee receives workers compensation and unemployment insurance protections. You also want to establish a principled relationship with your employee who is caring for and interacting with precious family members. Getting the relationship started on the right footing, including complying with legal and tax formalities, helps set the tone for the relationship.