New Jersey 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 New Jersey household employment.
Household employees must be paid at least the highest of federal, state, or the applicable local minimum wage rate. New Jersey’s state minimum wage rate of $11.10/hour will apply to most household employers. Households with six or more employees have a minimum wage of $12/hour.
All household employees, including live-in workers, in New Jersey, are required to be paid at least time and a half for hours worked over 40 in a seven-day workweek.
State Unemployment Tax & Rate
In New Jersey, the new employer SUI (state unemployment insurance) rate is is 2.6825 percent on the first $36,200 of wages for each employee. Employers also pay 0.1175 percent into the Workforce Development/Supplemental Workforce funds.
New Jersey is one of a few states that require employees to also pay into unemployment. Employees pay 0.3825 percent into unemployment insurance and 0.0425 percent into the Workforce Development/Supplemental Workforce funds on the first $36,200 of their wages.
Workers’ Compensation Insurance
Household employers in New Jersey are required to have workers’ compensation coverage for all part- and full-time employees. In New Jersey, you may be able to add workers’ compensation to your homeowner’s policy. If not, get a quote on workers’ compensation insurance.
Disability & Family Leave Insurance
Household employees in New Jersey also pay 0.47 percent of taxable wages for temporary disability insurance (TDI) and 0.28 percent for family leave insurance (FLI). These rates apply to the first $138,200 in wages.
New employers pay 0.5 percent on the first $36,200 of wages for each employee toward TDI. New employers do not pay into FLI.
Paid Sick Leave
The New Jersey Paid Sick Leave law applies to all employers – including families that hire household help. Household employees can accrue up to 40 hours of paid sick leave at a rate of one hour for every 30 hours worked. While unused sick time must carry over to the next year, it can be capped at 40 hours. An employer can also offer to pay an employee for unused sick time at the end of the year. However, unused sick time earned but not used doesn’t need to be paid upon separation from employment.
Paid sick leave can be used for:
- Diagnosis, care, treatment of or recovery from the employee’s own mental or physical illness, injury, or condition including preventive care
- Caring for a family member during the diagnosis, care, treatment of or recovery from a mental or physical illness, injury, or condition including preventive care
- Time needed because the employee or family member is a victim of domestic or sexual violence. This includes:
- Medical attention needed to recover from physical or psychological injury or disability caused by domestic or sexual violence
- Services from a designated domestic violence agency or other victim services organization;
- Psychological or other counseling
- Legal services such as obtaining a restraining order or participating in any civil or criminal proceedings related to domestic violence or sexual violence
- Time when the workplace, school, or childcare is closed by order of a public official due to a public health concern.
- Attending a school-related conference, meeting or function requested or required by the school
GTM Payroll Services can help manage paid sick leave for household employers. Call (800) 929-9213 to get started.
Learn more about New Jersey State’s Paid Sick Leave.
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 New Jersey 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