A domestic laborer makes your home life easier. You could also land in hot water with the IRS or face expensive liability bills if you do not follow certain laws. Whether you hire a nanny, gardener, or cook, understand several facts before you hire a domestic employee.
Who's Considered a Domestic Laborer?
Domestic laborers or domestic service workers provide services around a private home. They may live with you or in their own homes.
Common types of domestic workers
- Babysitters
- Chauffeurs
- Caretakers
- Companions
- Cooks
- Gardeners
- Handymen
- Home health aides
- Housekeepers
- Nannies
- Nurses
- Personal care aides
- Waiters
What wages do you have to pay a domestic laborer?
Federal law generally requires payment of minimum wage for up to 40 hours of work per week. Overtime pay is usually one-and-a-half times the applicable minimum wage for hours worked over the standard workweek in most cases.
Is your domestic laborer an employee or an independent contractor?
A domestic laborer can be either an employee or an independent contractor. It is important to know the difference so you remain compliant with labor and tax rules.
An employee
- Works solely for you
- Follows your directions about the work day
- Uses your tools and equipment
- Relies on you to prepare payroll, withhold taxes, and carry liability, workers' compensation, and other insurance when required
Before you hire an employee, get an employer identification number (EIN) from the IRS and verify the individual's immigration documents to confirm they are legally authorized to work in the United States.
An independent contractor
- May work for multiple clients
- Owns and uses their own tools and equipment
- Bills you for hours worked
- Carries their own insurance and pays their own taxes
You generally do not need special paperwork to hire an independent contractor, but be careful to classify the worker correctly.
What are your alternatives to hiring a domestic laborer?
Because employment laws can be complicated and carry fines for non-compliance, consider alternatives that shift payroll and insurance responsibilities.
Options
- Hire a company: You pay the company, and it sends qualified workers to your home. The company also handles payroll and pays for insurance coverage and employment taxes.
- Go through an agency: An agency vets potential individuals and often handles payroll, taxes, and insurance paperwork while you select the individual who will work in your home.
Talk with your insurance agent about coverage options such as Malicious Acts Coverage and Difference in Limits (DOL) Insurance to ensure you have adequate protection for domestic workers and related risks.
If you have questions, talk to an agent.
Frequently Asked Questions
Do I have to withhold taxes for a nanny or housekeeper?
If the worker is your employee, you generally must withhold payroll taxes and report wages; consult IRS guidance or a tax professional for specifics.
How can I tell if someone is an employee or an independent contractor?
Consider the degree of control you have over the work, who provides tools, and whether the worker serves multiple clients; when in doubt, seek professional guidance.
Will my homeowner's policy cover injuries caused by a domestic worker?
Homeowner policies may provide some liability coverage, but coverage varies—check with your insurer to confirm limits and whether additional policies are needed.