How many of us get overwhelmed by the time and energy it takes to manage our careers, households, health, and what’s left of our social lives? Do you ever wonder if you could outsource the tasks you spend your so-called downtime on? It’s frustrating to finally get home from work and have kids (or parents) to feed, clothes to wash, and a Honey-Do List.
Maybe you work with or live near someone who delegates as masterfully to a full-time nanny, housekeeper, or home health aide as they do on projects at work. Could you do that? Maybe. But be careful. Many domestic employers don’t think of themselves as employers. They get the employment relationship wrong, assume their homeowners’ insurance policy will cover any of the aide’s injuries, and fail to learn which benefits are mandatory. Below, I have calculated the minimum annual costs of a full-time domestic worker.
Minimum Wage for a Full-Time Nanny in New York
Effective 12/31/2019, all New York City employers must pay a minimum wage of $15.00 per hour, including for domestic workers. Many of the families who hire these workers pay a weekly rate, which is arguably okay, as long as you pay at least $600.00 per week, plus overtime wages after an employee works 40 hours.
Even if you are paying what you believe is a weekly rate, the Wage Theft Prevention Act (“WTPA”) still requires you to:
- Give the employee written notice of pay rate, employer name and contact information, pay day, and other employment terms
- Keep payroll records, such as the days and hours the domestic employee worked
- Issue paycheck receipts with specific information, such as pay period and how pay was calculated
Hiring an online payroll company, such as Gusto, is a very cost-effective way for domestic employers to meet the WTPA requirements.
Domestic employers (including elderly and disabled persons) who hire live-in help, might owe overtime wages, even if the live-in help actively works on household chores fewer than 40 hours per week. For example, imagine that your 88-year-0ld mother is still mostly independent and has a paid companion who lives with her. The companion takes your mother to appointments and helps her with errands. She cooks, cleans, and socializes with your mother five hours per day, six days per week. She is off on Sundays, but she sleeps at your mother’s house Mondays through Saturdays, in case assistance is needed. There has only been one instance in five years where she was needed through the night. Nevertheless, she is not exactly free from all employment obligations for the night and early morning hours. So, she is probably due overtime pay, but your mother should be able to credit the fair market value of the room where the companion sleeps, a reasonable amount for food, and other expenses. This is definitely something I recommend you discuss with an employment attorney, such as my colleagues, Joseph Harris or Nancy Schess. I focus on the disability, Paid Family Leave, unemployment, and workers’ compensation insurance compliance.
Speaking of these mandatory insurance benefits, let’s look at the cost of coverage.
Mandatory Insurance Coverage for Full-Time Housekeepers in New York
Yes, you need to provide DB, PFL, UI, and WC insurance coverage to your full-time domestic employee. No, she is not an independent contractor. Think about that for a moment.
An independent contractor is an independent business owner with a contract to perform services she publicly sells to others. If she’s working for you full-time, you are likely her only “client”. She depends on you for her income and possibly for housing and meals. When would she have time to sell her services to others? That would be a terrible business model. She is not a business owner. Thus, she is not an independent contractor. Put her on payroll and secure the necessary insurance. Although I regularly negotiate penalty reductions, I’d rather you not have to get a $50,000.00 penalty for non-compliance before you choose to take care of this.
What You Should Budget for a Full-Time Elderly Companion in New York
In case you haven’t been keeping track, here’s the calculation:
Annual Wages $31,200.00
Payroll Taxes +3,200.00
MIN. BUDGET $35,600.00
Few of us generate enough income each year to pay more than $35,000.00 per year for full-time domestic help, which is why some employers try to justify paying workers off-the-books and for less than the minimum wage. Make no mistake, this is in violation of several laws. If you can’t afford this level of assistance, try hiring a more casual worker on an occasional basis. The relief it gives you might help you work more effectively and eventually have that extra cash on hand for full-time help.
Not sure about worker classifications?
Nance L. Schick, Esq., is an employment attorney, ethno-religious mediator, conflict resolution coach, and diversity trainer based in New York City. Her goal is to keep managers and small business owners out of court and build their conflict resolution skills–so everyone has a better work experience. She is creator of the Third Ear Conflict Resolution process, author of DIY Conflict Resolution, and an award-winning entrepreneur acknowledged by Super Lawyers (ADR, 2018, 2019 & 2020), the New York Economic Development Corporation/B-Labs (Finalist, Best for NYC 2015 & 2016), U.S. Chamber of Commerce (2015 Blue Ribbon Small Business), and Enterprising Women Magazine (Honorable Mention, 2014 Woman of the Year awards).