California Household Employment
Household employers need to comply with tax, wage, and labor laws that affect nannies, in-home senior caregivers, and other household employees. While federal laws cover employers in all states, there are also state- and city-specific regulations that employers must follow. Here’s what you need to know about California household employment.
Household employees must be paid at least the highest of federal, state or the applicable local minimum wage rate.
California has various minimum wage rates depending on the location of work.
California Minimum Wage Rate
The state minimum wage rate in California is $12/hour for employers with 25 or fewer employees. This rate will increase $1/hour every year until it reaches $15/hour in 2023.
Local Minimum Wage Rates in California
These California cities have a local minimum wage rate that is higher than the state’s rate and supersedes the state’s minimum wage requirement.
|City||2020 Minimum Wage Rate (Hourly)|
|Hayward||$12 (increases to $14/hour on July 1)|
|Los Angeles (city and county)||$14.25 for small employers|
|Pasadena||$14.25 for small employers|
|Santa Monica||$13.25 for small employers|
Exempt v. Non-Exempt
For an employer with less than 26 employees, an employee must earn at least $45,760 to be considered exempt from overtime rules. While an employee’s title is not determinative of exempt status, these workers typically are not exempt:
- Baby nurses
- Executive assistants
- Personal assistants
- Personal chefs
- Personal drivers
- Senior caregivers
Within the non-exempt classifications, a household employee could be considered a personal attendant. To be a personal attendant, an employee must work in a private household and spend at least 80 percent of their working time supervising, feeding, or dressing a child or person who by reason of advanced age, physical disability, or mental deficiency needs supervision.
Some workers who could be considered exempt depending on the circumstances of their employment include:
- Chiefs of staff
- Estate managers
- House managers
Exempt workers typically manage a staff for the majority of their time as an employee.
An overtime rate of time and a half applies when a non-exempt household employee works:
- more than eight hours in a day
- more than 40 hours in a workweek
- eight hours on the seventh consecutive day of work in a Monday-Sunday workweek.
An overtime rate of double time applies:
- after 12 hours in a day
- all hours worked after eight on the seventh consecutive day of work in a Monday-Sunday workweek if the total hours worked exceeds 30 hours and the total hours in any one workday is more than six hours.
For personal attendants, an overtime rate of time and a half applies:
- after nine hours in a day or 40 in hours in a week (live-out)
- after nine hours in a day or 45 hours in a week (live-in)
There is no double-time rate for personal attendants.
For live-in household employees who are not personal attendants, an overtime rate of time and a half applies:
- after nine hours in a day
- after working five workdays in a workweek up to an including nine hours on the sixth and seventh workdays
A double-time rate applies for all hours worked in excess of nine hours on the sixth and seventh workdays.
Keep in mind that midnight starts a new day and the eighth day of work starts a new week.
Flat fee arrangements, for overnight shifts as an example, are typically against the law in California. An employer could consider paying different rates of pay for different types of work (as long as the rates are at or above minimum wage and overtime rules are followed). A family could pay their nanny a lower rate for overnight hours as compared to their normal rate as their children are usually sleeping at night.
In California, non-exempt employees who work a 24-hour or longer shift must be paid for sleeping time. However, if an employee has the ability to get more than five hours of uninterrupted sleep, then those hours do not need to be paid. The time excluded for uninterrupted sleep can’t exceed eight hours. The employer must also furnish adequate sleeping facilities.
Employee v. Independent Contractor
A recent California Supreme Court decision created a new “ABC test” that adopts an expansive definition of an employee. The test presumes that a worker hired to perform services is an employee of the hiring business, subject to the employer’s ability to provide all three of the following:
- The worker is free from the hirer’s control and direction in connection with performing the work both under contract and in fact.
- The worker performs work that is outside the usual course of the hirer’s business.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature of the work performed for the hiring entity.
The ruling has made it incredibly difficult for any worker in the state to be classified as an independent contractor.
Workers’ Compensation Insurance
All employers – including families that have hired household help – need a workers’ compensation policy that covers all employees. You may be able to get a rider on your homeowner’s or renter’s policy. Part-time and temporary employees are typically covered by your homeowner’s policy. A full-time worker would need to be added. Without the appropriate coverage, you could be held personally responsible for your employee’s lost wages and medical bills due to a work-related injury or illness. Check with your insurance agent on how to add a household employee to your policy.
Maintaining Time, Vacation, and Sick Time Records
Accrued but unused vacation time must be paid out at the time of the employee’s termination. There is no “use it or lose it” policy. Vacation time must also be tracked as it accrues. An employer can pay an employee for any unused vacation time at the end of the year or allow their employee to carry over time to the following year with an accrual cap.
California’s law dictates that sick leave balances must be listed on the employee’s pay stubs.
Meal and rest breaks must be documented. If they are not provided, then premium payments must be paid and noted on the employee’s pay stubs. Meal and rest breaks can be capped at two hours a day.
Employment Documentation and Pay Stub Requirements
A household employer must have proper documentation in place including:
- Signed offer letter/employment agreement
- Confidentiality agreement and/or mutual agreement to arbitrate, as appropriate
- An employee handbook that includes a harassment and discrimination policy
- Wage theft protection notice. This notice provides employees their rate of pay, designated pay day, employer’s intent to claim allowances as part of the minimum wage, and the basis of wage payment (paying by the hours, shift, etc.), including any applicable rates for overtime.
According to California law, employers must give their works an itemized statement with every paycheck that includes:
- Total gross wages
- Hourly rate of pay
- Total hours worked
- Any deductions
- Net pay
- Pay period dates
- Employee’s name and last four digits of their Social Security number
- Employer’s full name and address
Termination and Final Pay Procedures
All final wages must be paid at the time of, or shortly after, an employee’s termination or you can risk waiting time penalties. Employees who quit must receive their final paycheck within 72 hours of giving their notice. Employees who are fired must be paid on the same day as their termination. An employee’s final paycheck must include payment for unused vacation days.
The penalty for failing to follow final pay procedures is a full day’s wages for each day the final paycheck is late up to a maximum of 30 days.
Domestic Worker Bill of Rights
California’s Domestic Worker Bill of Rights extends overtime pay rights to certain personal attendants working in the home who were not previously entitled to overtime pay. Learn more about California’s Domestic Worker Bill of Rights.
Paid Family Leave
California Paid Family Leave provides up to six weeks of partial pay to employees who take time off work to care for a seriously ill family member (child, parent, parent-in-law, grandparent, grandchild, sibling, spouse, or registered domestic partner) or to bond with a new child entering the family through birth, adoption, or foster care placement.
Learn more about California’s Paid Family Leave.
Paid Sick Leave
All employees who work 30 or more days within a year must be given at least 24 hours of paid sick leave annually.
Download our California Sick Leave Guide (PDF).
In addition to the state law, Los Angeles, San Diego, and San Fransisco have their own city laws.
Los Angeles Paid Sick Leave
Employees in Los Angeles who work 30 or more days within a year of beginning employment, whether full-time, part-time, or temporary, will earn paid sick leave based upon the number of hours worked. Read more about Los Angeles Paid Sick Leave.
San Diego Earned Sick Leave
Household employers are required to provide at least five days of earned sick leave to all employees doing work within the city’s boundaries. Read more about San Diego Earned Sick Leave.
San Francisco Paid Sick Leave
Every employee, whether exempt or non-exempt, full-time or part-time, permanent or temporary, who is employed within the City and County of San Francisco for thirty days or longer are entitled to accrued paid sick leave at their regular rate of pay. Read more about San Francisco Paid Sick Leave.
San Fransisco Income Tax
San Fransisco imposes a local income tax on employers not employees. This is a flat income tax of 1.50 percent on an employee’s earned income.
San Fransisco Payroll Expenses Tax
San Fransisco levies a 0.38 percent payroll expense tax on employers whose annual payroll expense exceeds $320,000.
State Unemployment Tax & Rate
In California, the new employer SUI (state unemployment insurance) rate is 3.4 percent on the first $7,000 in wages paid to an employee in a calendar year.
State Disability Insurance Tax
California is one of five states that require household employers make additional employee withholdings for disability insurance (SDI). This program provides short-term benefits to employees who are unable to work due to a non-work related illness or injury including pregnancy. SDI also provides paid family leave benefits, which extends benefits to employees who are unable to work because they need to care for a seriously ill family member or bond with a new child.
SDI is a deduction from an employee’s wages. The 2019 tax rate is one percent on the first $118,371 in SDI taxable wages paid to an employee each year (maximum tax is $1,183.71). The SDI rate is set by the California state legislature and may change yearly.
All household employers need to follow certain federal regulations including:
Fair Labor Standards Act (FLSA) Classification Guidelines
- Household workers are considered employees and not independent contractors. Learn more about misclassifying employees as independent contractors.
- Household workers are also non-exempt employees, which means they receive overtime pay of at least time-and-a-half for hours worked over 40 per workweek. Learn more about overtime pay.
Social Security and Medicare taxes are commonly referred to as FICA taxes. If you pay cash wages of $2,200 or more to any household employee in a calendar year, then you need to withhold and pay FICA taxes.
FICA taxes are 15.3 percent of cash wages. As an employer, you pay 7.65 percent (6.2 percent for Social Security and 1.45 percent for Medicare). Your employee’s share is also 7.65 percent, which you can withhold from their wages or choose to pay it yourself.
You don’t withhold or owe FICA taxes on wages you pay to your spouse, child under the age of 21, parent, or any employee under the age of 18 at any time during the calendar year.
Federal Unemployment Tax (FUTA)
If you pay a household employee total cash wages of $1,000 or more in any calendar quarter, you’ll owe federal unemployment tax. This is an employer-only tax. FUTA is six percent of cash wages on the first $7,000 you pay an employee.
If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2020, the IRS has set the optional standard mileage rate at 57.5 cents per mile driven. Paying mileage is not mandatory or you can reimburse your employee at a different rate. However, if the cost of mileage causes your employee to fall below minimum wage, then you need to reimburse them for mileage.
GTM Can Help with California Household Employment
Call (800) 929-9213 for a free, no-obligation consultation with a household employment expert. We’ll answer all your questions and show you how to comply with wage, tax, and labor laws as a household employer. Or, if you’re ready to have GTM Payroll Services handle it all for you, get started our nanny payroll and tax service.
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Free Resources on Household Employment
- Nanny Tax Calculator
- Nanny Tax Guide
- Tax Forms
- Tax Calendar for Household Employment
- Free eBook Chapter: Managing Payroll and Taxes
- Payroll & Holiday Calendar
- Guides & Checklists
- Employer Responsibilities
- Domestic Workers' Rights
- Workers' Compensation Requirements
- Government Websites for Household Employers