When seeking to employ caregivers for homecare services there are primarily two ways to do so. Hiring through a licensed Home Care Organization (HCO) such as ours or by directly hiring the caregiver and treating them as an employee. The reasons people typically consider hiring directly is to save on the costs. But there are several other important factors to consider.
Can’t I hire someone as an independent contractor?
The simple answer to this is NO. Not under current California State employment law. Household workers simply do not meet the criteria to be considered independent contractors. While many families hire this way, they are leaving themselves open to back taxes, fines, and penalties if this came to the attention of the Employment Development Department (EDD). This could happen for example if you fired the caregiver and they applied for Unemployment Insurance.
What Does This Mean to the client?
When hiring directly in the State of California, families/clients are assuming the role of employer. This includes the primary roles of the HCO, to provide employee supervision and continuity of coverage should the caregiver get sick, hurt or quit. It also includes registering with the EDD within 15 days after they have paid $750 or more in total cash wages in a calendar quarter. And responsibility for withholding taxes and contributing the employer’s share to Social Security1.
Most people who decide to hire directly the legal way will use a payroll service to handle all the reporting and withholding requirements. There is a cost for this service in addition to the employer tax contribution costs. They will also need to provide some form of medical coverage in case of injury.
Legal & Financial Liabilities
HCO’s assume all employment liabilities. This can have huge consequences in terms of the risks to the client’s estate. There are cases of former caregivers suing the estate for back wages and other damages. These lawsuits can be brought during their employment or after, including after the client is deceased. This should be a consideration even if you are employing someone directly according to the law.
While using an HCO can be more expensive, people often fail to consider the additional costs of being the caregiver’s employer. These include providing sick pay, following the overtime regulations, and as stated before, managing the continuity of care. When you add in the additional employer costs and the time required to recruit, hire and manage employees the difference in costs become less apparent. Not to mention the potential legal & financial exposure.
As a licensed HCO, Optimal Senior Care provides company employees to work at your home. We actively recruit registered and background checked caregivers. Our employees are all trained and supervised. They are covered under our Worker’s Comp policy and we carry the required levels of liability insurance and are bonded.
1. 2018 Household Employers Guide.