Many JDJ clients hire domestic staff to help manage their busy lives. The roles of these employees run the gamut, and examples include caregivers for young children and aging parents, estate managers, housekeepers, and even yacht captains and plane pilots.
When families become employers, they are obligated to fulfill many of the same requirements as businesses, often without the benefit of in-house legal counsel or human resources departments. Employing domestic staff carries with it an inherent risk because of their involvement in the most personal aspects of family life. At JDJ, we have seen firsthand many challenging situations that could have been avoided with proper documentation and insurance. When an unforeseen problem occurs, JDJ has a network of providers with the resources to help resolve issues.
JDJ has stepped in to handle difficult situations with domestic staff where the risk to the family could have been minimized by following some of the guidelines below.
- It is critically important to have the correct paperwork in place for both new and existing employees. Start with a detailed job description that outlines the specific duties and expectations of the position. Then establish an employment agreement for each employee outlining salary, hours, overtime, paid time off, and other benefits. Some states, including Massachusetts, have strict regulations related to hiring and employing domestic staff. We recommend that families run a background and credit check as part of their hiring process. All employees should also sign a non-disclosure and confidentiality agreement to help protect the family’s privacy.
- Work with a payroll provider to ensure taxes are withheld correctly, overtime is paid according to state and/or federal law, and the required forms are generated for tax purposes. According to IRS Publication 926, a worker is a household employee “if you can control not only what work is done, but how it is done,” regardless of the number of hours worked, how frequently the person is paid, or whether the person was hired through an agency. A common error is treating a worker as an independent contractor rather than an employee, but the IRS considers misclassification tax evasion, so this can be a costly mistake.
- Put an appropriate insurance program to mitigate the various risks involved in employing domestic staff. Two important examples are workers compensation and Employment Practices Liability Insurance (EPLI). A worker’s compensation policy provides coverage for medical expenses and lost wages in case of employee injury on the job. EPLI helps insure your family against employment-related claims such as discrimination, wrongful termination, and harassment. Also, be sure to add employees to your auto policy if they will be driving a car you own.
JDJ can act as an outsourced human resources department to assist in the hiring, onboarding, documentation, management, issue resolution, and termination of domestic employees. We recommend that our clients seek the advice of an attorney for specific domestic employment matters.