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Hiring A Caregiver - What You Should Know

For most, finding in-home assistance for a loved one is prompted by an unexpected and sometimes urgent health concern.  Many people are unaware of their options, as well as the challenges, that hiring caregivers presents.  Because the home care industry is unregulated in California, has no government oversight, and requires no specific licensing, consumers should be well-informed and mindful of the potential risks.

Among home care companies, there are two distinct business models which differ greatly from one another: companies whose caregivers are employees and companies whose caregivers are independent contractors. While they may appear similar on the surface, there are many differences and issues to consider:

Companies whose caregivers are EMPLOYEES Companies whose caregivers are INDEPENDENT CONTRACTORS
  • Full-service companies are responsible for the hiring, training, supervision, and scheduling of caregivers.
  • As the employer, these companies are required by law to carry Workers' Compensation Insurance, and most will also carry General Liability Insurance, and a Surety Bond.
  • Employer-model companies are required to withhold Federal and State income taxes, State Disability Insurance taxes, and withhold and match Social Security and Medicare taxes for their employees.
  • They also contribute to State and Federal Unemployment Insurance funds.  Employees are issued W-2 forms annually.
  • Independent contractor-model companies do not train nor supervise their caregivers.
  • Independent contractor-model companies do not carry Workers' Compensation Insurance, Liability Insurance, nor Bonding for their caregivers.
  • Some independent contractor-model companies attempt to mislead potential clients by carrying these insurance policies for their administrative personnel only, and can then produce proof of coverage.   However, since their caregivers are independent contractors, their actions are not covered by the policies.
  • Taxes are not withheld, and caregivers are issued 1099 forms annually or simply paid in cash.

Companies often use independent contractors in an effort to reduce overhead costs - which are significant, considering the expense of employment taxes and insurance coverage.  These types of companies may charge less than employer-model companies, but shopping on price alone is not always prudent.  If you are comparing different companies, make sure you ask whether the caregivers are employees or independent contractors because the risks can often outweigh any potential cost savings.

The Risks of Independent Contractors:

  • Clients and families are responsible for the costs of caregiver injuries
  • Caregivers may not be properly trained or supervised
  • The Home Care company has no responsibility for theft or negligent acts
  • Clients may be considered Household Employers, which carries potential tax consequences, just as when hiring a caregiver privately (see below)

Hiring a Private Caregiver?  What You Should Know:

Another option for loved ones is to hire a caregiver privately.  This can, however, present its own set of issues.  In a private caregiver situation, the Clients are solely responsible for finding and screening prospective caregivers.  One challenge they face is that individual clients often do not have the knowledge or the resources to go through this process effectively, and when a caregiver is found, clients arrange for the terms of employment, and direct payment for services.  Problematic issues may arise, for instance, if the caregiver is ill or needs time off unexpectedly, and a client may be faced with a potentially dangerous situation being alone.  Family members may be called upon at moment’s notice to assist.  If personality or performance issues arise, clients may need to start the entire hiring process over again. 

Household emnployment is another consequence of both hiring a caregiver privately and even when using an independent contractor provided by a home care company.  Caregivers are not eligible for independent contractor status, and must be someone's employee - and if it's not the company, it's the client.  Being a household employer is not optional, it’s the law.  If a caregiver earns more than $750.00 per quarter or $1700.00 per year, the client is considered a Household Employer, and subject to the following requirements:

Client Responsibilities as Household Employers:

  • Withhold and pay Social Security and Medicare Taxes
  • Withhold Federal and State Personal Income Taxes
  • Pay Federal and State Unemployment Insurance
  • Provide Workers' Compensation Insurance
  • Comply with Federal and State wage and hour laws and regulations

Colonial Home Care Services, Inc. is a full service Home Care Company.  Our Home Care Aides are employees of our company, not independent contractors.  We conform to all applicable State and Federal employment and tax laws, and carry all appropriate licenses and insurance policies.   Rest assured that when you entrust your home care needs to Colonial, you and your family are protected from these issues and liabilities.

 


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North Orange County
Headquarters And Training Center

326 W. Katella Ave., Suite F
Orange, CA 92867
(714) 289-7220

 

South Orange County
27281 Las Ramblas, Suite 200
Mission Viejo, CA 92691
(949) 426-2180

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