Liability, Safety and Fairness are why Hiring a Private Caregiver Is Not Cheaper
Hiring a private caregiver is not really cheaper than using a full-service, licensed agency, despite what might seem like a discount of a couple of dollars an hour in the beginning.
The reasons hiring a private caregiver and paying “under the table” is not cheaper can be organized under three themes, Liability, safety and fairness.
Liability of Hiring a Private Caregiver
In-home caregivers for seniors are never an independent contractors. It doesn’t matter if that is how the caregiver describes himself/herself, and it doesn’t matter if clients say that that they are only willing to hire a caregiver as an independent contractor. The pros just don’t outweigh the cons of hiring a private caregiver.
The California Law, AB5, made this even more clear in California. And nationwide, the Department of Justice and State Attorney Generals are cracking down on referral agencies who misclassify personal care attendants or caregivers as independent contractors in order to avoid the costs of employment liabilities.
We’ve seen many families who thought they were saving money get sued after their loved one passed away by a private caregiver for back wages, overtime, lack of sick time, failure to pay payroll taxes, and more. One family I know had to settle for $40,000 just to avoid court after an elder law attorney sent them a threatening letter.
There is no excuse in the courts for non-compliance. Stating, “I didn’t know I had to treat a caregiver as an employee,” will do nothing to limit potential fines and judgements.
If you have one household employee – you must comply with all the requirements that businesses face.
What’s required? You must have worker’s compensation insurance – not having it is actually a misdemeanor.
Wage and hour rules must be followed, including rules about overtime, which must be paid after 9 hours in a day, 40 hours in a week. You can’t legally pay a flat rate per day, for example, you must pay hourly.
Federal and State payroll taxes must be deducted for an employee’s wages, both the employee portion and the employer portion.
Paid sick days are required in California. Private Caregivers who don’t get sick days can file a wage claim with the Labor Commissioner’s Office. That can lead to fines and retro payments.
Unemployment insurance must be provided to caregivers. Not providing it often leads to investigations or fines when a private caregiver is fired and files for unemployment.
Writing a personal check or paying cash to a private caregiver is illegal. The paycheck and pay stub must meet California standards, and not paying through a payroll service or agency can lead to $4000 fines for each personal check you wrote.
Safety of Hiring a Private Caregiver
Other reasons that hiring a private caregivers is not cheaper than using a full service agency involve safety.
Agencies screen caregivers carefully, especially when it comes to criminal history. A caregiver not being willing to work with an agency is a big red flag and often means they can’t pass the background checks, so they look for work on Craigslist or senior magazines.
What if a private caregiver gets sick, quits suddenly or leaves for an extended vacation? That can cause a vulnerable senior to go without care and put a family in a bad situation. Agencies provide a safety network and fill in caregivers for those situations.
Plus supervision of caregivers is provided by home health agencies such as At Home Nursing Care at the start of care, at least every two months, and when issues arise. This lessens the burden on families to confront private caregivers with corrections or complaints and leads to a more professional atmosphere. Some families don’t know how to talk appropriately to employees, and using the wrong terms or raising your voice could lead to a complaint of harassment.
Fairness of Hiring a Private Caregiver
Finally, fairness and respect for the caregiving population is important and is another reason not to try and skirt the laws by hiring a private caregiver.
When caregivers work privately and are paid “under the table”, they don’t get credit towards tax incentives, Medicare and eventually, social security. It’s important to respect caregivers’ hard and meaningful work by making sure they get the protection they need in their later years, protection that comes from paying into government programs through legal payroll taxes. That’s the only way people are eligible for entitlements later on.
Liability, safety and fairness, those are main examples why hiring a private caregiver is not cheaper, nor better, for both families and paid caregivers.
To watch a 4 minute video on this topic, click the picture below.