Oftentimes, when someone is caught, it’s unintentional. Say your household employee files for unemployment, social security, disability, or workers compensation benefits. Oops! You’ve just gotten caught not paying her employment taxes.
Or it could be entirely intentional: your employee quits or you fire her, and she turns you in -– or tries to blackmail you. Or a disgruntled neighbor reports you.
Under any of these scenarios, the result is the same: You get caught and face considerable consequences. And what are the consequences of paying illegally? They can include:
- paying all back taxes, penalties and interest
- charges of perjury and tax fraud
- up to $250,000 in fines and up to 5 years imprisonment
- ruining your reputation and career (for example, an attorney being disbarred)
OK, Now What Do I Do?
All right, we’ve established that being a household employer can be daunting, but you also can see that it’s not worth the risk of not doing it right. There are resources available to help you, including companies like Legally Nanny (www.legallynanny.com), which can help you set up your household employee legally and educate you on your obligations going forward.
Be aware that household employment laws vary by state and sometimes even by municipality, and nannies and other household workers are often treated very differently than other types of employees.
The bottom line is that you shouldn’t assume that because you understand the federal and state overtime and other employment laws for the company where you work that those automatically apply to your nanny. Consider getting help, even if only to get you set up correctly and to teach you what you need to know to be a household employer. Once you’ve got those things under your belt, you’ll be pleasantly surprised at how simple the ongoing tasks of being a household employer can be.
Most important, don’t forget to enjoy the benefits of hiring your nanny—she’s there to care of the most precious person in your life, after all!
