2020 Household Employment Compliance Year in Review

The COVID-19 pandemic changed our way of life in 2020. How we worked. How our kids learned. How we went to the grocery store. It also had a major impact on household employment as families managed their nannies and other workers. Besides the health crisis, there were a number of other significant moments in household compliance for 2020. Here’s a look back in chronological order (January 2020-present).

IRS issues a new Form W-4

With the changes to tax law brought on by the 2017 Tax Cuts and Jobs Act, the IRS revised the method an employer uses to determine how much federal income tax to withhold from an employee’s paycheck. Any employee who received their first paycheck in 2020 or was rehired during the year must use the new form. What Household Employers Need to Know About the New Form W-4

FFCRA mandates paid sick leave for pandemic-related reasons

The Families First Coronavirus Response Act was the first major piece of legislation to address the COVID-19 pandemic. For certain circumstances related to COVID-19, household employees are eligible for paid sick leave and/or paid family leave. Paid leave under the FFCRA expires on December 31, 2020. What Household Employers and Nannies Need to Know About the Families First Coronavirus Response Act

FFCRA also provides tax credits to employers for employee paid leave

To help cover the costs of mandated leave, the FFCRA provides household employers with a refundable payroll tax credit. Employers will be repaid, dollar-for-dollar, for the cost of providing COVID-19 leave to their employees. How to Take Advantage of FFCRA Tax Credits

CARES Act expands unemployment benefits

In a major expansion of unemployment insurance benefits, the CARES Act extended unemployment insurance coverage to eligible individuals for weeks of full unemployment, partial unemployment, or the inability to work due to the COVID-19 pandemic. A Complete Guide to Unemployment Benefits under the CARES Act

IRS announces more options for unused amounts DCAPs

These options include an extended period for incurring dependent care assistance programs (DCAPs) expenses. The change is designed to allow your employer to respond to changes in your needs as a result of the COVID-19 pandemic. IRS Provides Additional Guidance on DCAPs During COVID-19 Pandemic

CARES Act allows employers to make tax-free payments toward employee student loans

Among other measures aimed at easing student loan burdens during the coronavirus pandemic, the CARES Act includes a provision that temporarily allows employers to make tax-free payments of up to $5,250 toward their employees’ student loans. The payment must be made by December 31, 2020. How to Make a Tax-Free Payment Towards Your Nanny’s Student Loans

Philadelphia’s domestic worker protection law goes into effect

The law guarantees several labor rights including written employment contracts, meal and rest breaks, and paid and unpaid leave. It is considered one of the strongest laws in the nation that protects domestic workers and makes Philadelphia the largest U.S. city to extend labor rights to household employees. Philadelphia’s Domestic Workers’ Bill of Rights is Now in Effect

Au pairs are suspended from entering the country due to pandemic

The White House proclamation suspended entry of au pairs who wished to work in the U.S. They will not be able to obtain a new J visa during the suspension. Au pairs currently working in the U.S. were not impacted by the proclamation. Amid Pandemic, Au Pairs Suspended from Entering the United States

Minimum wage rates are on the rise … again

Several states, counties, and cities increased their minimum wage rates on July 1, 2020, and more will do so at the start of the new year. Household employees must be paid at least minimum wage with the highest hourly wage of applicable federal, state, and local rates in effect. Here are the States and Cities Increasing their Minimum Wage Rates on July 1

FFCRA paid leave to be reported on Form W-2

According to guidance from the IRS and U.S. Treasury Department, household employers are required to report the amount of qualified sick and family leave wages paid to their employees under the Families First FFCRA on Form W-2. Household Employers Must Report Pay for FFCRA Leave on Form W-2

States respond to the pandemic with updated employee leave requirements

Some states have passed new laws and issued new regulations and guidance about employee leave requirements for COVID-19 reasons. States are Updating Employee Leave Requirements for Coronavirus

Oregon Workplace Fairness Act creates several workplace requirements for household employers

The new law requires household employers to have a policy about discrimination, harassment, and reporting and adds some restrictions to confidentiality agreements. Oregon Workplace Fairness Act Takes Effect October 1

New York City law provides paid safe and sick leave to household employees

The city amended its Paid Safe and Sick Time Act to align with the state’s paid sick leave law. It requires household employers to provide nannies, housekeepers, and other domestic workers with 40 hours of paid safe and sick leave. Amended NYC Paid Sick Leave Law Now in Effect

Household employees included in California’s safety-related retaliation protection law

Domestic workers are now covered by the California law that prohibits an employee from being laid off for refusing to perform work in violation of safety standards, where the violation would create a real and apparent hazard to the employee. California Extends Safety Related Retaliation Protection to Household Employees

Nanny tax threshold for 2021 inches higher

The Social Security Administration increased next year’s Employment Coverage Threshold for household employees, commonly called the nanny tax threshold, by $100 to $2,300.

New York State household employees eligible for sick leave under new law

Under New York State’s Paid Sick Leave Law, household employees can use job-protected, paid or unpaid sick leave for certain designated purposes beginning January 1, 2021. New York State’s Paid Sick Leave Law Now in Effect

Household employers to reconcile FFCRA paid leave on Schedule H

The IRS released a draft version of the 2020 Schedule H, which includes several new lines to reconcile the paid leave provisions outlined in the Families First Coronavirus Response Act as well as the employer tax credit to offset the cost of paid leave. Draft of 2020 Schedule H Reconciles FFCRA Paid Leave and Tax Credits

Colorado creates a paid family and medical leave insurance program

State voters passed Proposition 118, which mandates paid leave for virtually all employees including household workers. The Colorado PFML program will be funded by employers and workers with premium collection starting in 2023 and paid leave available to employees in 2024. Colorado Paid Family and Medical Leave Program Covers Household Employees

Stay up to date on the latest in household employment compliance

Household employment is what we do so we look at every tax, wage, and labor law from the perspective of a family with household help. We cut through a lot of the legalese and explain, in plain English, what you need to do and why to comply with the law.

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With nearly 30 years in the household employment industry, GTM Payroll Services has helped tens of thousands of families across the country comply with the often confusing and complex state and federal tax, wage, and labor laws. If you need assistance, give us a call at (800) 929-9213 for a complimentary, no-obligation consultation with a household employment expert.

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