In California, the short answer is no, there is no caregiver independent contractor legally.
At Home Nursing Care warns consumers what some ‘registries’ are hiding as they offer a caregiver independent contractor. The simple fact is a caregiver cannot be an independent contractor legally, no matter what they are called. It’s a legal misclassification that can lead to numerous penalties, fines, back taxes and more. AB5, a law about how employees should be classified in California, made the issue even more dicey for families who hire an caregiver independent contractor.
Risk of Investigation Growing
Over the last couple of years, federal agencies have been cracking down on referral services and employers who misclassify caregiver independent contractors. The US Department of Labor recently announced it had recovered 28.6M for nearly 25,000 workers, mostly women, who were not classified correctly as employees or paid the proper amount of overtime.
Caregivers in California, along with most other states, must be legal W2 employees. That means someone must be paying payroll taxes, have worker’s compensation insurance, and pay stubs that meet strict California standards.
Rules to follow in California
Having employees in California is a challenge. There are ever changing rules, lots of documentation that must be done, income that must be reported, taxes that must be withheld, insurance that must be provided. The list goes on and on. At Home Nursing Care complies with all of those regulations, and more.
Others do not. To avoid legal in home care costs and employment liability and cost, many families are told by registries, (firms which simply screen caregivers and introduce them to a family for work in a home), that the caregivers are “independent contractors” and so insurance and payroll issues are the responsibility of the caregiver, not the elderly client. Other families may simply hire a caregiver off of Craigslist and pay cash, or a personal check, or Venmo the caregiver, but that’s another legal violation.
It’s “never true” that a caregiver can be an independent contractor
According to California state regulators, it is never true that a caregiver is an independent contractor. Yet registries continue to make that assertion to families who believe they can save a couple of dollars per hour by using a registry to find an in home caregiver for mom or dad.
“The caregiver working in a domestic setting is always an employee, either of the family or of the registry,” said Lynn Prettyman. That definitively answers the question of can a caregiver be an independent contractor. She works for the California Employment Development Department, or EDD. It’s the agency that regulates employers and levies fines for non-compliance with labor laws.
The dangers and real liability
There are dangers associated with caregiver independent contractors and illegal pay. Pettyman says many audits are triggered when a worker, such as a caregiver, files for unemployment and the state realizes no wages were reported and no unemployment insurance was withheld.
Or a caregiver may fall in the elderly client’s home, become injured and will seek worker’s compensation coverage that was never purchased. The state then investigates who the employer was and levies fines to pay for the unemployment or worker’s comp insurance.
Prettyman says once an employee earns $1000 in a quarter, a three month period, then the wages for that worker must be reported to the state and unemployment insurance and payroll taxes must be paid. Additionally, California says even an individual with only one employee must provide worker’s compensation insurance. Not having worker’s compensation insurance can lead to a $10,000 fine or more.
In addition, referral agencies cannot train the employees at all, and they cannot supervise them or direct how the client is to be cared for. All they can do is run a background check. These agencies and the families who hire through them are not following IRS rules for caregivers.
Asked if the state actually goes after elderly people who hired what they thought were independent contractors, Prettyman answered simply “yes.”
Families looking for private caregivers need to “watch their step” and make sure they are well informed that short term savings could lead to longer term liabilities. Hiring someone privately to avoid insurance or taxes is fraud.
What solution is there?
It’s always better to work with a quality whole service agency such as At Home Nursing Care. All of our caregivers are true W2 employees, we have worker’s compensation, liability insurance, we offer benefits such as health, vision and dental, plus a 401k and a company match.
What’s more, our in home legal caregivers are trained and supervised by a registered nurse, who monitors the care plan. Paying caregivers under the table is simply not worth the risk.
Especially after AB 5 passed in California, the role of a caregiver as an employee of the elderly client was solidified. Read more about AB5 here.
If you or someone you love needs quality inHome Care in Los Angeles or San Diego, whether it’s a caregiver to help with activities of daily living or a registered nurse to provide medication management, give At Home Nursing Care a call at 888-634-8004. Our wages are in line with the independent caregiver salary, while also maintaining all legal requirements.
Rest assured At Home Nursing Care employees are screened, trained and supervised. Plus we handle all state requirements in order for our clients to worry about only one thing: getting better and staying independent.
Updated May, 2021 and July 2023