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California Fact Sheet Household Tax Compliance Tips


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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 $2,200 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 will 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 California to fund unemployment and worker re-training programs.

Income taxes

Federal and state income taxes are ultimately the responsibility of the household employee; however, it is a best practice 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.

CALIFORNIA LABOR LAWS

Minimum Wage

Household employees in California are covered by both the FLSA and California IWC Wage Order 15 and are non-exempt, hourly employees, paid at no less than the minimum wage. California minimum wage rate is $12.00 per hour. This rate will increase by $1.00 per hour each year until it reaches $15 per hour in 2023. Many California cities have local minimum wages that apply*:

  • Alameda minimum wage rate: $15.00 per hour.
  • Belmont minimum wage rate: $15.00 per hour.
  • Berkeley minimum wage rate: $15.59 per hour, but will increase to $16.07 per hour after July 1, 2020.
  • Cupertino minimum wage rate: $15.35 per hour.
  • Daly City minimum wage rate: $13.75 per hour.
  • El Cerrito minimum wage rate: $15.37 per hour.
  • Emeryville minimum wage rate: $16.30 per hour, but will increase to $16.84 per hour after July 1, 2020.
  • Fremont minimum wage rate: currently not higher than California minimum wage, but will increase to $13.50 per hour after July 1, 2020.
  • Hayward minimum wage rate: currently not higher than California minimum wage, but will increase to $14.00 per hour after July 1, 2020.
  • Los Altos minimum wage rate: $15.40 per hour
  • Los Angeles county minimum wage rate: $13.25 per hour, but will increase to $14.25 per hour after July 1, 2020.
  • Malibu minimum wage rate: $14.25 per hour, but will increase to $15.00 per hour after July 1, 2020.
  • Menlo Park minimum wage rate: $15.00 per hour
  • Milpitas minimum wage rate: $15.00 per hour, but will increase to $15.40 per hour after July 1, 2020.
  • Mountain View minimum wage rate: $16.05 per hour
  • Novato minimum wage rate: currently not higher than California minimum wage, but will increase to $13.00 per hour after July 1, 2020.
  • Oakland minimum wage rate: $14.14 per hour
  • Palo Alto minimum wage rate: $15.40 per hour
  • Pasadena minimum wage rate: currently not higher than California minimum wage, but will increase to $14.25 per hour after July 1, 2020.
  • Petaluma minimum wage rate: 00 per hour
  • Redwood City minimum wage rate: $15.38 per hour
  • Richmond minimum wage rate: $15.00 per hour
  • San Diego minimum wage rate: $13.00 per hour
  • San Francisco minimum wage rate: $15.59 per hour, but will increase to $16.07 per hour after July 1, 2020.
  • San Jose minimum wage rate: $15.25 per hour
  • San Leandro minimum wage rate: currently $14.00 per hour, will increase to $15.00 per hour after July 1, 2020.
  • San Mateo minimum wage rate: $15.38 per hour
  • Santa Clara minimum wage rate: $15.40 per hour
  • Santa Monica minimum wage rate: $14.25 per hour
  • Santa Rosa minimum wage rate: currently not higher than California minimum wage, but will increase to $14.00 per hour after July 1, 2020.
  • Sonoma minimum wage rate: $12.50 per hour
  • South San Francisco minimum wage rate: $15.00 per hour
  • Sunnyvale minimum wage rate: $16.05 per hour

*-List my not be exhaustive.  Please check local ordinances for additional requirements.

Overtime Pay

There is NO deduction for sleep time on 24 hour shifts.

IF YOU ARE… THEN YOU ARE ENTITLED TO…
A personal attendant employed in a private household* Overtime (1.5x regular rate of pay) Doubletime (2x regular rate of pay)
Live-Out >9 hours/day or >40 hours/week n/a
Live-In >9 hours/day or 45 hours/week n/a
Other type of domestic worker
Live-Out >8 hours/day or >40 hours/week >12 hours/day or >8 hours on the 7th day of the workday
Live-In >9 hours/day or up to 9 hours worked on the 6th of 7th day of the work week >9 hours on the 6th or 7th day of the work week
*Personal Attendants spend 80%+ of time feeding, bathing, dressing, and directly supervising any person under care (California IWC Wage Order 15).

Paid Time Off

California requires that you provide up to 48 hours of paid sick leave per year, but you may limit sick time usage to 24 hours per year. Hours are accrued at a rate of 1 hour of sick leave gained for every 30 hours worked. Employees begin accruing sick leave the day they start working, but cannot use their sick time until they have worked for a minimum of 90 days. Please note that you must allow an employee’s unused accrued hours to carryover from one year to the next. You are not required to pay for accrued sick leave at the time of termination, no matter the reason.

Instead of allowing employees to accrue sick time, you may provide at least 24 hours of paid leave each year of employment. You may not have to provide any sick leave if your employees only provide in-home support services.

You are not required to provide vacation leave, but if you do, you must pay the employee at the time of termination for all vacation they earned but have not yet taken.

Some cities have additional laws concerning sick leave, and the more employer-friendly law applies. Carryover refers to being able to save accrued sick time from one year to the next:

  • Berkeley: you may offer no less than 48 hours of sick leave upfront or use the accrual system. If sick time is accrued, carryover is required and sick time use may be capped at 48 hours per year.
  • Emeryville: you may offer no less than 48 hours of sick leave upfront or use the accrual system. If sick time is accrued, carryover is required and sick time use may be capped at 24 hours per year.
  • Los Angeles: you may offer no less than 48 hours of sick leave upfront or use the accrual system. If sick time is accrued, carryover is required but allowed to be capped at a minimum of 72 accrued hours, and sick time use may be capped at 48 hours per year.
  • Oakland: You must allow employees to accrue sick time. At any given date, they may have up to 40 hours of accrued sick time saved, and carryover is required.
  • San Diego: you may offer no less than 40 hours of sick leave upfront or use the accrual system. If sick time is accrued, carryover is required but allowed to be capped at a minimum of 80 accrued hours. Sick time use may be capped at 40 hours per year.
  • San Francisco: you may offer no less than 40 hours of sick leave upfront or per 1,200 hours worked. If sick time is accrued, carryover is required. At any given date, sick time accrued may be capped at 40 hours, as in an employee may have a max of 40 hours “in the bank”.
  • Santa Monica: you may offer no less than 40 hours of sick leave upfront or use the accrual system. If sick time is accrued, carryover is required.

Mileage Reimbursement

The federal government establishes and updates a maximum rate for non-taxable mileage reimbursement each year.  The current rate is $0.575 per mile.

Payroll Frequency

California allows you to pay your household worker daily, weekly, bi-weekly or semi-monthly, but does not permit monthly pay cycles. You must pay overtime wages no later than the payday for the next regular payroll period that comes after the period in which the overtime wages were earned. Pay upon involuntary separation is due immediately, and within 72 hours for resignation.

Payroll Documentation

You are required to provide your California household employee a pay stub every pay period that includes all applicable hourly rates, hours worked, gross and net wages earned, all deductions, the dates included in the pay period, their name and last 4 digits of their SSN or other individual taxpayer identification number, and your name and address.

Employment Contract Requirements

You must provide a signed employment agreement, confidentiality agreement and/or mutual agreement to arbitrate as appropriate, and a wage theft protection notice. A free sample work agreement can be found here.

The wage theft protection notice must include hourly and overtime pay rates per hour, any special pay rates, the regular pay day, your name, physical address, and telephone number, and the name, address, and policy number of your workers’ compensation insurance carrier. You are required to have your employee sign two copies, one for your records and one for their records. Whenever this information changes, you must send your employees a new notice.

Workers’ Compensation Insurance

California requires household employers to carry Workers’ Compensation Insurance. This is typically an endorsement in a California homeowner’s insurance policy. Additionally, HWS can help you obtain this insurance through our insurance partner (just give us a call).

State Unemployment Insurance

California requires a new employer state unemployment insurance tax of 3.4% for the first $7,000 wages paid to each employee. This may vary if you have previous employees.

Frequency of Tax Filings

CA requires near-immediate payment of income tax withholding upon meeting certain thresholds set by statute. Currently, you have 15 days to make a payment after accumulated taxes meet the state threshold. As such, HWS can only guarantee compliance through our Complete Payroll service level. Quarterly tax filings are required of all household employers.

HWS WILL HELP YOU DO THE RIGHT THING

HWS knows that most families want to pay their household employees legally and insure 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.

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