COVID and Household Employees: The Rise of Household Employers

By Bethanie Murray

School closures and remote-learning options have forced many families into hiring individuals to help with educating and caring for their children in the COVID19 era.  Many families are shouldering this burden themselves, while others have created “pods” to share the expense with other families.  Hiring “household employees” such as tutors, nannies, babysitters, home health-aids and the like has become a more popular solution to issues caused by the pandemic, but many families do not consider their legal obligations when employing these individuals.

With some exception, individuals that are hired directly to work in someone’s home are household employees under Ohio law, not independent contractors. This means that families who hire these individuals are employers and subject to many regulations and laws governing employers.  Even if the parties agree, slapping the “independent contractor” label on the arrangement does not make it so.  As these services and arrangements are becoming more commonplace due to the pandemic, household employers should be aware of their obligations and consider the following:

1.      Your Worker’s Classification Matters - If you can control not only what work is done, but how, where, and when it is done, then the worker is an employee. By contrast, a self-employed worker typically provides his or her own tools and offers services to the general public as an independent business.

A classification of employee status carries with it a host of legal obligations for a household employer, such as maintaining workers’ compensation coverage, paying unemployment taxes and fulfilling other state and/or federal tax withholding requirements, and complying with state and federal employment laws (e.g. Fair Labor Standards Act, Title VII, etc.).

2.      What and How you Pay your Worker Matters - The applicability of some laws will depend on the household worker’s earnings. For example, in the context of Ohio workers’ compensation laws, if a household employee earns $160 or more in a calendar quarter, the employer must maintain Workers’ Compensation Insurance. Consider some other threshold triggers:

1. A household employee that earns $1000 or more in any calendar year – Subject to Ohio Unemployment laws;
2. A household employee that earns $2,200 or more in 2020 – Withhold and pay Social Security and Medicare taxes;
3. A household employee that earns $1,000 or more in any calendar quarter – Pay federal unemployment tax

3.     The Number of Household Employees Matters - the number of employees is also used as a trigger for the applicability for some laws. Many state and federal regulations apply even when there is just one employee.

Fortunately, there are many resources available to help household employers stay in compliance.  Working with an accountant or payroll services provider helps ensure that household employees are paid appropriately and that applicable taxes are withheld.  For a nominal $120 fee household employers can apply for coverage with the Ohio Bureau of Workers’ compensation.  The BWC will then provide an estimate of premiums based on your projected payroll and employee classification, which is usually a minimal yearly amount.  Employers should also register with the IRS to obtain a tax-ID number and with the Ohio Department of Job and Family Services.  It is also a good idea to review any applicable insurance policies and speak with your insurance agent about your coverage, especially if you will be hosting a “pod” with other families in your home.

Should you or someone you know have any questions regarding employing household workers in a legally compliant manner, please reach out to any member of Reminger’s Employment Practices Group or Workers’ Compensation Practices Group.

^{This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.}

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