The following "Legal Alert" was sent to us by Bob King, of Legally Nanny.
As part of Legally Nanny’s continuing Legal Alert series, I wanted to let you know about H.R. 5804, the Taxpayer Responsibility, Accountability and Consistency Act of 2008. This bill, recently introduced in the U.S. House of Representatives, could directly affect you as a household employer.
H.R. 5804 would significantly increase penalties for employers who misclassify workers as independent contractors instead of correctly classifying them as employees. Additionally, the bill places the burden of proof on the taxpayer to demonstrate that the worker was properly classified. Finally, in addition to increasing the penalties for failing to properly pay employees and provide correct payroll information such as W-2 forms, the legislation also imposes increased penalties for intentionally disregarding the worker’s proper classification.
What does this bill mean to you? Nothing, if you’re doing everything correctly and treating your nanny as your employee. However, some clients insist on mischaracterizing nannies and other domestic workers as independent contractors – or just paying their nanny under the table – in an effort to avoid paying household employment taxes. H.R. 5804 could make this an even more expensive mistake.
Under both federal and state law, nannies and other household staff are almost always employees; they are not independent contractors. H.R. 5804 would heighten the already stiff penalties to families mischaracterizing such workers.
Robert E. King, Esq. is the Founder of Legally Nanny, the leading law firm representing household employers and domestic employment agencies. Legally Nanny assists clients in hiring, employing, and paying nannies, elder care providers, and other household employees legally. For more information, feel free to contact the firm at (714) 336-8864 or at firstname.lastname@example.org for a free initial consultation.
© Copyright 2008 Legally Nanny. All rights reserved. This article is for informational purposes only; it is not legal advice. This material is not intended to seek employment in any jurisdiction in which Legally Nanny is not allowed to provide professional services.