New York Domestic Workers "Bill of Rights" Update

NY Governor Patterson (D) signed the legislation (A1470B/S2311E) and the provisions of the bill take immediate effect.

I have some updates and clarification to earlier media reports.

1. Overtime: The bill provides overtime for hours worked over 40 in a week by a live out (come and go) domestic, and overtime over 44 for live in domestics. This does NOT make any change to former law. Federal labor law (FLSA) stipulated overtime for live out domestics since 1974, and NYS law provided the benefit to live ins working over 44 hours a week as long as I have been in the business (predated 1993).

2. The companionship exemption provided in the FLSA is retained in the NYS legislation.

3. Worker's Compensation Insurance and Disability Insurance are still required for household employment when the domestic (nanny, housekeeper) works 40 or more hours on an average week.

4. The NY Commissioner of Labor is directed to report to the governor, the speaker of the assembly and the temporary president of the senate before November 1, 2010 on the feasibility and practicality of allowing domestic workers to organize for purposes of collective bargaining.

5. The domestic worker must have one 24 hour period per week off from work, but may agree to work that 7th day. In this case the 7th day work must be compensated at the overtime rate (apparently no matter the total hours worked in the 7 day week).

6. After one year of service, the domestic is entitled to 3 paid days of leave (sick, vacation, personal, etc.) at the regular rate of compensation.

7. Anti-discrimination provisions are included to protect the nanny from sexual or verbal harassment and abuse.

You can view the text of the legislation here.

New York Domestic Workers Bill Awaiting Gov. Patterson's Signature

The New York State Assembly and State Senate have both passed legislation known as the Domestic Worker's Bill of Rights. According to news reports, the legislation that emerged from conference includes standardized work weeks, one day off each week, three paid days off each year and overtime pay.

Overtime pay for hours over 40 in a week is a protection already offered to all live out nannies, housekeepers, and elder care workers under Federal law. The New York law stipulates overtime form hours over 8 worked in a day.

It appears some of the more contentious protections considered, including notice of job loss and employer provided health insurance, were dropped in the conference committee to win passage. Governor Patterson is expected to sign the legislation.

In related news, a New York Times op-ed piece titled Pay your Nanny on the Books, suggests "considering the difficulties in enforcing such laws, families that employ domestic workers must be persuaded to forgo the considerable short-term advantages offered by an under-the-table system...A workplace so ungoverned is the Wild West, rife with temptation for exploitation and abuse. Even laws like the one New York may soon have can be only a first step. Because so many of the workers they are meant to protect are undocumented, few will want to come forward to report violations."

Mid-Year Withholding Tax Changes

New income tax withholding formulas go into effect today in Arizona and the city of Philadelphia.

Arizona has changed the method it uses to calculate the withheld income tax. Arizona employers are advised the have their household employee complete a new A-4 form and make the appropriate changes to withholding. The HomeWork Solutions' Nanny Tax Calculator is updated with the new tax rates. Clients are advised to log into their accounts, calculate the new paycheck withholding, and report the payroll profile change to the office via the online interface.

The City of Philadelphia resident wage tax has a new rate of 3.928% (.03928). The non-resident wage tax is now 3.4985% (.034985).

The Department of Labor has stepped up wage and hour enforcement in 2010, as well as prosecuting misclassification of employees as independent contractors. Protect yourself against claims by disgruntled household employees - nannies, housekeepers and maids. Learn more about the "nanny tax" and the employer's legal and financial obligations! Download HomeWork Solutions' free e-Book, the Nanny Payroll Tax Quick Start Guide.

Federal Tax Returns and Identity Theft?

A common practice of individuals who are working in the US without valid work authorization is to use another tax payer's Social Security Number to secure employment, and then to file end of year income tax returns using their Individual Tax Payer Identification Number.

The IRS has identified 1.2 million 2007 Federal income tax returns where the scenario above appears to have been the case according to a report released by the Treasury Inspector General for Tax Administration (TIGTA). Of real concern is the instances where the valid SSN holder doesn't know that their number is being used, as the IRS has no mechanism for advising the true account holder of the possible identity theft.

The report concluded:

"This report reveals a very troubling situation. The IRS must take steps to ensure that innocent taxpayers are notified when there is evidence that their identity has been compromised,� said J. Russell George, the Treasury Inspector for Tax Administration. “When the IRS is in a position to notify victims of the theft of their identity, it should do so without fail."

To view the report, including the scope, methodology, and full IRS response, go to: http://www.treas.gov/tigta/auditreports/2010reports/201040040fr.pdf.

Nanny Confidentiality Clause in the Work Agreement

A client called incensed that her former nanny was awarded unemployment benefits by the state. The back story is this same client was earlier hurt and upset that her neighbor knew about a recent marital infidelity - because the neighbor and the nanny chatted frequently at the neighborhood play ground. She fired the nanny, in her mind for cause.

When the nanny filed for unemployment, she contested the claim, asserting that the nanny was fired for cause. The unemployment board did not see it the same way. This might have been avoided if the client had a work agreement with a confidentiality clause in it that the nanny agreed to as a condition of employment. Confidentiality clauses are not just for the rich and famous - every family should take the time to put a nanny work agreement in place that includes as one of its essential components a nanny confidentiality agreement. Every family has information and circumstances that the nanny may become privy to that they clearly would not want broadcast about the neighborhood, to the nanny's next employer, or to the nanny's friends and family.

HomeWork Solutions publishes tips on writing the Nanny Work Agreement in our popular Ten Tips Series. An important point is that you want to make sure the confidentiality agreement survives the work agreement.

Clients and site visitors can find sample Nanny : Family Work Agreements at the 4nannytaxes.com website in the Nanny Tax Forms area.

Summer Nannies & Nanny Taxes?

Many families hire temporary, summer only nannies to provide childcare services during school vacations.

Temporary, or summer only nannies, are subject to the same employment taxes and employer tax reporting as a permanent full time or permanent part time nanny. If the summer nanny earns $1700 or more in the year the family (the employer) is legally obligated to provide that nanny a W-2 at year end and to submit a Schedule H with their annual Federal Form 1040 to report and remit the employment taxes.

The family is legally entitled to collect on a pay check by pay check basis the Social Security and Medicare taxes (7.65%) from the employee; if they fail to collect they remain responsible to pay this to the IRS.

Unemployment taxes are likely due on the nanny's wage also. This is completely paid by the employer, and most reporting is done on a calendar quarter basis. Summer nannies who started in May are likely to trigger these tax obligations in the 2nd Quarter, covering April, May and June, and the taxes are generally due in July.

Free download - Learn more about the "nanny tax" and the employer's legal and financial obligations! Download HomeWork Solutions' free e-Book, the Nanny Payroll Tax Quick Start Guide.

Nanny Contracts & Work Agreements

The New York "Domestic Workers Bill of Rights" is the subject of intense scrutiny in the New York media right now. Both legislative chambers have passed their own versions of the law, and they are currently working on a process called "reconciliation" where the chambers negotiate with each other on a final bill.

Nanny employers are realizing two things. The first is that they can get themselves in hot water when they pay a nanny a "salary" without any accounting for hours. Nannies under FEDERAL law are non-exempt (hourly) employees. It is not a matter of negotiation between nanny and family, it is the law. Families can still pay a salary, they just need to be careful to state the employee's compensation in hourly rate terms, with a weekly base guaranteed, and to keep track of hours worked contemporaneously. How do you do this? The HomeWork Solutions' Hourly Rate Calculator will perform the translation for you, and they you simply memorialize it in your work agreement (contract).

The second realization is that the nanny work agreement or nanny contract is an effective tool to protect the family and the nanny from misunderstandings and wage disputes. Spell it out up front and you have no issues! Disgruntled former nannies have been dragging their former employers to court over unpaid overtime disputes for the last several years. In each case the nanny prevails in the majority of the legal points. Why? Families did not do their paperwork, translate wages to hourly terms and keep accurate time tracking records. Worse, these families failed to pay for overtime outside the normal work hours (the evening they stay in town for an event until midnight for example). This is penny wise and pound foolish. When nanny works outside her agreed hours, pay her. Not only is it the right and legal thing to do, but you also keep a happy nanny!

http://www.4nannytaxes.com/info/TipsHiringNannies.cfm has a variety of titles designed to help nannies and nanny employers navigate common employment issues in easily digestible formats.

Protect yourself against claims by disgruntled household employees - nannies, housekeepers and maids. Learn more about the "nanny tax" and the employer's legal and financial obligations! Download HomeWork Solutions' free e-Book, the Nanny Payroll Tax Quick Start Guide.

New York Household Employers - Alert!

The New York State Senate passed the Domestic Workers Bill of Rights (S2311D/Savino) making New York the first state in the nation to provide new standards of worker protections for more than 200,000 domestic (household) employees.

It is not a done deal yet - it still needs to go through the reconciliation process, but for all those families paying off the books (if there are 200K NYC area domestics and only 225K families NATIONWIDE paying nanny taxes we know there are MANY off the books) you will now be in more jeopardy of being caught if the employee files a grievance. The NYS legislature probably doesn't realize it but this will be a revenue raising scheme!

The biggest issues this legislation addresses are unpaid overtime (nannies are non-exempt employees under Federal and NYS law and are entitled to an overtime differential) and notice of job ending, or pay in lieu of notice. The former is typically addressed via the State's Department of Labor's Wage and Hour Division. Presumably there might be another grievance channel made available to household employees. The latter - notice of termination or pay in lieu of notice - is not guaranteed or regulated by Federal law for employers with fewer than 100 employees.

Confirmation Hearings Highlight I-9 Violations by Nominee.

In 1993, the scandal du jour was the failure of several Clinton nominees to pay their "nanny taxes". Remember Zoe Baird, Kimba Wood, Ron Brown? The first two had to withdraw their nominations over their failure to pay employment taxes for household employees.

Fast forward to 2010 and we are now seeing nominees facing difficult questions over failure to require and maintain I-9 forms. All employers, including household employers who hire nannies, housekeepers, maids and other household employees, are legally required to verify the work eligibility of newly hired workers. The Department of Homeland Security makes the Form I-9 available to employers.

Alan Bersin, commissioner of US Customs and Border Protection (CBP), received an interim appointment from President Obama to his position, part of the Department of Homeland Security. In hearings May 12 before the Senate Finance Committee, it came to light that Mr. Bersin failed to obtain I-9 forms from his 10 household employees over the last 20 years, a failure that will cost him his confirmation according to Senators.

Senator Max Baucus (D-Montana) is quoted: "As the person responsible for securing our nation's borders, your failure to follow the law in this matter is unacceptable."

Mr. Bersin paid the "nanny taxes" and did not hire ineligible employees, rather he failed to follow Federal law which requires the Form I-9 for all employees.

IRS Nationwide "Open House" Saturday May 15

The IRS will host an "Open House" at 200 offices nationwide to specifically help individuals and small businesses address tax problems. Each office will be open from 9:00 a.m. until 2:00 p.m. local time.

According to the press release, "IRS locations will be equipped to handle issues involving notices and payments, return preparation, audits and a variety of other issues. At a previous IRS Open House on March 27, approximately two-thirds of taxpayers requested and received assistance with payments and notices."