Household employers are required to meet or exceed local, state and federal labor laws.  (Please note that many states and municipalities have important nuances in the law.  Give us a call and we'll give you a complimentary consultation so you know all the local issues that may affect you).  Generally, however, the following labor issues apply:

Minimum Wage. Household employees must be paid at a rate that meets or exceeds the Federal Minimum Wage standards -- currently $5.85 per hour.  Effective July 24, 2008, it increases to $6.55 per hour.  Important Note: Many states have higher Minimum Wage standards.  In those cases, the higher wage standard applies.  For minimum wage laws by state, visit the Department of Labor.

Mileage Reimbursement.  Employees who are asked to use their own car while on the job should be reimbursed at a rate of 58.5 cents per mile.  This covers the cost of gas plus wear and tear on the car.  Commutes to and from work each day are not considered "on the job" and, therefore, employers are not responsible for any reimbursement on those miles.  If money is paid to the employee to defray the cost of commuting, it is considered taxable income and should be reported as part of the employee's wages.

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; if you live in New York, please call for details).

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, which verifies the employment identity and eligibility of all workers, citizens and foreign nationals.  Recent regulations issued by the Department of Labor establish "nanny" as a skilled worker category for employment based on green card petitions.  For American families willing to hire foreign-born nannies, this means legal immigration options are available under certain circumstances.

Obviously, with pending reform of immigration laws, the employment verification regulations and procedures may change quite rapidly.  We recommend that employers interested in sponsoring a foreign nanny contact an attorney specializing in immigration law.  M. Gabriela Ungo, partner at the law firm of Walker & Ungo, handles employment verification issues and immigrant petitions for household workers and nannies across the country.

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.

• Those who are contributing members of society will receive preferential treatment if there is a question about who should stay and who should go. If an undocumented worker wants to remain in the United States, the wisest thing they can do is make sure their taxes are reported and paid each year.

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.

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