Families who hire full-time, part-time or temporary workers to work in their home (i.e. nannies, nurses, housekeepers, chefs, etc.) are legally considered household employers.  (Although many people want to treat their worker as an independent contractor - some will even insist on its legality - the IRS has declared this practice illegal). 

 

As a household employer, families are required to withhold taxes from their employee's pay and remit those taxes - along with paperwork and some employer taxes - to the state and federal tax agencies each quarter.  In addition, they are required to prepare and file special paperwork at the end of each tax year.

On top of the tax remittance process, there are a number of local, state and federal labor laws that affect most household employers.  These labor laws are neither expensive nor burdensome to families - as long as they are addressed at time of employment.  After the fact, they can be devastatingly expensive and time-consuming.

 

The Law  
For every individual that an employer hires, the US Citizenship and Immigration Services (USCIS) requires the employer to verify the individual's eligibility to work in the U.S.   Specifically, the employer is required to examine identification documents and complete a Form I-9 for every employee.  The government considers it a federal felony and unlawful for an employer to hire a person, or to continue to employ a person, knowing that the worker is unauthorized to work in the U.S. An employer who violates these laws can face penalties of $250 to $2,000 for each unauthorized employee according to the Immigration and Nationality Act.
 
With respect to overtime regulations, the federal government classifies household employees as non-exempt workers. The Fair Labor Standards Act (FLSA) states that non-exempt employees must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half the regular rate of pay.  If a non-exempt employee is paid a salary for a standard work week of more than 40 hours, overtime pay should be addressed as a component of the written contract to ensure protection under the law.