Household employers are required to meet or exceed local, state and federal labor laws.  Specifically:

Minimum Wage. Household employees, like all employees, must be paid at a rate that meets or exceeds the Minimum Wage standards. The Federal Minimum Wage is currently $5.15 (2007). Some states have higher Minimum Wage standards.  In those cases, the higher wage standard applies.

Overtime. Household employees are classified as non-exempt workers, and federal overtime law dictates that non-exempt workers must be paid overtime for more than 40 hours in a 7-day work week. Overtime is calculated at a rate of 1.5 times the normal wage. Live-in employees do not have to be paid overtime rates, but they must be paid for every hour that they perform duties. (Exception: Employers in New York state must pay overtime rates to live-in employees when they reach 44 hours in a 7-day work week).

It is legal to pay your employee a salary and have the overtime hours included in the compensation. To accomplish this, you must have a written employment agreement that explicitly details the regular rate of pay and the overtime rate of pay. If you'd like help calculating the regular and overtime pay rates or with the employment agreement language, just let us know.

Vacation/Illness/Holiday. Household employers are not required by law to provide paid vacation, sick days or holidays. (Exception: San Francisco employers are required to provide paid sick leave; if you live in San Francisco, please call for details). While these perks can be effective ways to attract and retain good employees, you are not legally obligated to do so.

Legal Work Status. According to the law, employers are required to verify that workers are legally permitted to work in the United States. Specifically, the government asks each employer to utilize Form I-9 and ensure that the employee has the proper paperwork. Obviously, this is a subject of great debate currently among lawmakers and nobody knows whether changes will be made to the law and, if so, what those changes will be. Given the large number of undocumented workers currently residing in the United States and working in household jobs, most experts agree on two points:

• The U.S. Citizenship and Immigration Services (CIS) and the Internal Revenue Service (IRS) work together to create an environment in which undocumented workers can pay taxes without fear of deportation. Many illegal workers and their employers wrongly assume that it is safer to fly under the radar by not filing tax returns. In reality, the opposite is true; by paying taxes, the CIS views the worker as a contributing member of society – helping to pay for schools, hospitals, roads, and other government services. The CIS does not have any desire to force these contributing residents to leave the country.

Workers' Compensation. Employers in some states are required to carry a Workers’ Compensation policy on household employees. Workers’ Compensation is not a tax; it’s an insurance policy that helps cover lost wages and medical expenses due to injury or illness resulting from the workplace. The intent of Workers’ Compensation is to help employees make ends meet when they’re laid up due to injury or illness caused by the job site – thereby reducing the number of counter-productive law suits over employee accidents. To find out if Workers' Compensation is required in your state, click here.

If Workers' Compensation is required in your state, we suggest that you first check with your homeowner’s insurance carrier. Often, it is included as part of your umbrella homeowner's policy. If you're not already covered, you can usually add a rider to your policy.

Residents of New York, New Hampshire and Ohio: please note that there are special purchase restrictions in your state.

If your state does not require Workers’ Compensation, you might want to consider it anyway. If you're unsure, ask yourself what you would do if your employee slipped on your steps and was not able to work for two months and racked up $3,000 in medical and rehabilitation expenses. Would your employee be able to go two months without wages plus pay the medical bills? Would she be forced to seek another type of employment to sustain her? Would you feel compelled to help her out of the hole in order to maintain the relationship? If you didn’t help, would she be forced to file a lawsuit – or threaten a lawsuit – against you out of financial necessity?

By the way, that is a true story and it ended very badly – the nanny was terminated; the family was stuck without help for several months and to this day lives in fear of a lawsuit.

In cases like the one above, a Workers’ Compensation policy is worth every penny of the $300 - $500 annual premium.

In rare circumstances, there are other legal issues that come into play for household employers. If you have any questions about your particular employment situation, feel free to call us on our toll free Help Line at 888-273-3356. It might save you a bundle in legal fees and headaches down the road.