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Hiring Caregivers – Guidelines and Caveats

If you hire someone, you are responsible for many payroll, tax, and labor law requirements. Take care of these issues at the time you hire an individual. Do not wait until the last minute when you may expect your accountant to magically and efficiently prepare tax returns and other documentation.

  • 1. Be sure that the worker is properly classified. See IRS guidelines (opens new window)
  • 2. Obtain a Workers’ Compensation insurance policy. Your homeowners’ insurance agent will likely be able to help you with this. This should cover medical expenses and lost wages if a problem arises. It protects you and it protects the caregiver.
  • 3. Be very careful to keep these tax records separate. Do not intermingle them with family records or records maintained for another business you may have.
  • 4. Carefully budget to pay for employer taxes and to take advantage of tax breaks. See the IRS Employer Guide (opens new window) and the 2014 California Employer's Guide (PDF).
  • 5. This person will almost certainly be your employee, not an independent contractor.
  • 6. Most household employees are “non-exempt.” This means that they have a right to overtime pay when they work over 40 hours in a seven day week. There may be exceptions for live-in workers or companion care.