As our parents age, many of us will face the need to hire a caregiver for all or part of the day so that mom and dad can continue to live in their own home. But there are some important elder law matters to consider before engaging such a caregiver.
Is the Caregiver an Employee or an Independent Contractor?
Generally, if you contract directly with the individual as opposed to a company that specializes in caregiver placement, and you will pay that person more than either $1,000 in a calendar quarter or $2,100 per year (for the 2018 tax year), the IRS and the state of Michigan will deem the caregiver to be your employee, unless the employee is a spouse, a child under 21, or the parent. Accordingly, you will be responsible for withholding and paying federal and state employment taxes. As an employer, you will also have unemployment insurance and workers compensation insurance obligations.
Because complying with these requirements is a significant aggravation for most people, it usually makes more sense to contract with a business that specializes in the placement of caregivers. In that situation, the business, not you, has the legal obligations to comply with federal and state employment tax withholding and unemployment and workers compensation insurance obligations.
The Risks of Misclassifying an Employee as an Independent Contractor
Given the hassle of dealing with employer obligations, many people may be tempted to merely treat an individual caregiver as a contractor, even though the IRS would classify that person as an employee. However, if that person is really an employee in the eyes of the IRS, yet you pay the person as an independent contractor, then you, as the employer, could be held liable for the state and federal employment taxes you fail to withhold.
Additionally, if the caregiver is injured while providing services, you could be held liable for those injuries, and will not have the benefits of the workers’ compensation system handling the injury. You also could be subject to penalties or fines by the Michigan Unemployment Insurance Agency if you misclassify an employee as an independent contractor. Consequently, treating an employee as an independent contractor is never a good idea.
Request and Read the Caregiver Contract
If you are engaging an employee or a company to provide home caregiver services, you should have a written contract that documents the arrangement. The contract will address such issues as scheduling of the caregiver, compensation, payment dates, invoicing, days off, and termination among other items. Make sure that you read the contract – and understand it. If you have questions that cannot be adequately answered by the company, contact an attorney.
Interview the Caregiver Candidates
You obviously want to make sure that a potential caregiver is a good fit for your parents, so develop a list of questions that will help you screen and select the right candidate. There are numerous helpful resources available, including:
- 15 Questions to Ask During a Senior Caregiver Interview (care.com)
- Top 25 Interview Questions You Should Ask a Potential Caregiver (Seniors Resource Guide)
Ask for References
Both individual employees and independent contractors should be able to provide at least three references that you can contact to verify information about potential caregivers and determine their suitability. Don’t rely solely on references – be sure to check each candidate’s social media postings and activity, too.