Household Employment in Colorado
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 Colorado household employment.
Household employees must be paid at least the highest of federal, state or the applicable local minimum wage rate. Colorado’s state minimum wage rate of $12.32/hour applies.
Household employees in Colorado are required to be paid at least time and a half for hours worked over 40 in a seven-day workweek. Overtime compensation is not required for live-in employees.
State Unemployment Tax & Rate
In Colorado, the new employer SUI (state unemployment insurance) rate is 1.7 percent on the first $13,600 of wages for each employee. Employers with previous employees may be subject to a different rate. This an employer-only tax.
Workers’ Compensation Insurance
Household employers in Colorado are required to have a workers’ compensation policy for all household employees working 40 hours or more in a week or working five days or more in a week. Get a quote on workers’ compensation insurance.
Paid Family and Medical Leave
In 2020, Colorado voters padded Proposition 118, creating a paid family and medical leave program (PFML) for workers – including household employees – in the state. The Colorado PFML program will be funded by premiums of 0.9% of an employee’s wages, shared evenly between employers and workers (0.45% paid by the employer and 0.45% paid by the employee), and remitted by the employer beginning Jan. 1, 2023. Employers with fewer than 10 employees – which likely includes families with household help – are not required to contribute the employer share of PFML premiums. Also, employers can choose to pay a larger percentage of the cost up to the full amount.
Under the measure, paid leave becomes available to employees on Jan. 1, 2024, for the following purposes:
- To care for a new child during the first year after the child’s birth, adoption, or foster care placement;
- To care for a family member with a serious health condition;
- For the worker’s own serious health condition;
- For a qualifying military exigency; or
- Because the worker has a need for safe leave
Household workers may take up to 12 weeks of leave per year, or 16 weeks for a serious condition related to pregnancy or childbirth complications. Learn more about Colorado PFML.
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 $2,300 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 2021, the IRS has set the optional standard mileage rate at 56 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 Colorado 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 with 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