HOMEWORK SOLUTIONS IS HERE TO HELP!
Payroll tax compliance for your new employee does not need to be terrifying, time consuming or expensive. HomeWork Solutions is a nationally recognized “household payroll” service company, providing household employers nationwide with trusted and time saving payroll and payroll tax solutions.
WORKER CLASSIFICATION IS THE KEY
You become a household employer when you hire an individual to perform duties and provide services under your direction in your private home. Generally, these workers are your employees, not independent contractors. Failure to properly classify the worker and make the appropriate employment tax filings and payments is considered tax fraud by the IRS.
PAYROLL TAX RESPONSIBILITIES
You are responsible for federal employment taxes when you pay household workers as little as $1,000 in a calendar quarter or when you pay any individual employee age 18 or over $2,800 in a calendar year. Employers of domestic or household workers in New York are responsible for state unemployment insurance tax once you pay employees over $500 in a calendar quarter.
You have both Federal and State tax filing responsibilities. Federal employment taxes are reconciled with the household employer’s annual Federal Income tax return. Your state may require quarterly unemployment tax filings, as well as reports and remittance of state income taxes withheld, if applicable. Employee wages are reported to the Social Security Administration. Your employee is due a W-2 form in January.
Social Security and Medicare Taxes
The household employer is responsible for the payment of all Social Security and Medicare taxes to the IRS. You may choose to either collect your employee’s taxes via payroll deductions or fund these taxes yourself.
Unemployment Taxes
You will make contributions to the IRS and New York to fund unemployment and worker re-training programs.
Income Taxes
Federal and state income taxes are ultimately the responsibility of the household employee; however, best practice is to deduct these taxes from your full time employee’s wages to help them avoid owing large sums when they file their annual income tax returns.
OTHER LEGAL RESPONSIBILITIES
Verification of Work Eligibility
All U.S. employers are required to verify a candidate’s employment eligibility using Form I-9.
Fair Labor Standards Act (FLSA) Compliance
Maintain accurate and contemporaneous records including time tracking, gross pay calculations, and detailed records of all deductions from the employee paycheck.
Pay no less than minimum wage on an hourly rate basis.
Health Insurance
You are not required to provide employee health insurance, however there are financial and retention advantages to contributing some or all of your employee’s health insurance premium. HWS is happy to discuss this with you.
NEW YORK LABOR LAWS
Minimum Wage
New York defers to the FLSA, which requires that all domestics, including companions, be paid at no less than the greater of the city, state, or federal minimum wage.
New York minimum wage is $15.50/hr.
- New York City minimum wage is $16.50/hr.
- Nassau, Suffolk and Westchester minimum wages are $16.50/hr.
Overtime Pay
Live-out workers must be paid an overtime differential of 1.5 times the hourly wage for hours over 40 in a work week. Live-in workers must be paid an overtime differential of 1.5 times the hourly wage for hours over 44 in a work week. Overtime or premium pay is not required for hours worked in excess of 8 per day or on weekends or holidays.
Paid Time Off
Domestic Workers’ Bill of Rights
New York’s Domestic Workers’ Bill of Rights grants protections to full-time household employees, regardless of immigration status. Key requirements include:
- Minimum wage: Household employees must be paid at least the state’s minimum wage.
- Overtime pay: Time-and-a-half for hours over 40 per week (or 44 hours for live-in workers).
- Weekly pay: Required for all household employees.
- Paid time off:
- 30+ hours/week → 3 paid days off after one year.
- 20–29 hours/week → 2 paid days off.
- Under 20 hours/week → 1 paid day off.
- Rest day: One day off per week; employees can agree to work it at overtime rates.
- Written work policies: Employers must provide details on sick leave, vacation, holidays, hours, pay rate, overtime, and payday.
Household employers must also comply with unemployment insurance, workers’ compensation, and disability insurance requirements.
New York State Paid Sick Leave
Household employees accrue 1 hour of sick leave per 30 hours worked. Employers must provide:
- If you have 1–4 employees → Up to 40 hours unpaid leave per year.
- If you have 5+ employees → Up to 40 hours paid leave per year.
- Leave can be used for medical care, treatment, or preventive care for the employee or a family member.
- Employers must track accrual and provide usage details upon request.
New York State Paid Family Leave (PFL)
Household employees are entitled to paid leave for:
- Bonding with a newborn, adopted, or foster child.
- Caring for a seriously ill family member .
- Addressing military family needs.
- Quarantine/isolation orders for public health emergencies.
Eligibility:
- Full-time employees → Covered after 26 consecutive weeks of employment.
- Part-time employees → Covered after 175 working days (non-consecutive).
Employees contribute through payroll deductions
New York City Paid Safe & Sick Leave (ESSTA)
NYC’s Paid Safe and Sick Time Act requires household employers to:
- Provide 40 hours of paid leave per year at the employee’s regular rate.
- Accrue leave at 1 hour per 30 hours worked.
- List accrued/used sick leave on each pay stub.
Employees can use ESSTA for:
- Personal or family illness, injury, or preventive care.
- Domestic violence, stalking, or human trafficking situations.
- Business or school closures due to public health emergencies.
Mileage Reimbursement
The federal government establishes and updates a maximum rate for non-taxable mileage reimbursement each year. The current rate is $0.70 per mile.
Payroll Frequency
All household employees in New York must be paid on a weekly basis. Pay on separation is due on the next regular pay date.
Payroll Documentation
The NY Wage Theft Prevention Act requires all employees receive a pay rate notice at time of hire and any time the hourly rate changes. The notice must include regular and overtime rates of pay and the regular payday. In addition, you must offer a written notice on work policies including sick leave, vacation, personal leave, holidays, and hours of work.
Each time you pay an employee, you must provide them with a statement that includes the dates that they worked; their name; your name, address and phone number; their rates of pay and reason for getting paid; their gross wages earned, deductions taken, allowances taken, and net wages earned; and their regular rates of pay, their overtime rate, their number of regular hours worked, and their number of overtime hours worked, if they are not exempt. You can find a sample pay stub here.
Employment Contract Requirements
A written work agreement detailing work policies including sick leave, vacation, and personal leave should be provided to your employee. A free sample work agreement can be found here.
Workers’ Compensation Insurance
New York requires that household employers immediately obtain Workers’ Compensation and Disability Insurance (including Paid Family Leave) policies. HWS ALWAYS recommends obtaining a Workers Compensation Insurance policy for the protection it provides in the event of a work-related injury sustained by your employee. Information and an application are available online at the NYS Insurance Fund (NYSIF.com). More information about Workers Compensation Insurance can be found at http://www.wcb.ny.gov/content/main/coverage-requirements-wc/household-employers.jsp. and information about Disability Insurance and Paid Family Leave can be found at http://www.wcb.ny.gov/content/main/coverage-requirements-db/household-employers.jsp.
State Unemployment Insurance
New York requires a new employer state unemployment insurance tax of 4.1% for the first $12,500 wages (2024; consult the table below for prior and future years.) paid to each employee. This may vary if you have previous employees. The New York State UI contributions are comprised of a normal and subsidiary rate. Employers are also required to contribute to a separate re‑employment service fund. The normal rate is calculated each year for each employer and are influenced by many factors such as contributions paid and credited. Normal rates range from 0% to 8.9% (0.089) as of the time of this writing.
| The wage base amount for UI contributions will be adjusted effective January 1st of each year as follows: | |||
| Year | UI wage base | Year | UI wage base |
|---|---|---|---|
| 2013 and prior | $ 8,500 | 2020 | $ 11,600 |
| 2014 | 10,300 | 2021 | 11,800 |
| 2015 | 10,500 | 2022 | 12,000 |
| 2016 | 10,700 | 2023 | 12,300 |
| 2017 | 10,900 | 2024 | 12,500 |
| 2018 | 11,100 | 2025 | 12,800 |
| 2019 | 11,400 | 2026 | 13,000 |
After 2026, the wage base in New York will permanently adjust on January 1 of each year to 16% of the state average annual wage, rounded up to the nearest $100. The state average annual wage is established no later than May 31 of each year. The annual average wage cannot be reduced from the prior year’s level.
Frequency of Tax Filings
New York requires near-immediate payment of income tax withholding upon meeting certain thresholds set by statute. Currently, an employer has 5 days to make a payment after accumulated taxes meet the state threshold. As such, HWS can only guarantee compliance through our Complete Payroll service level.
New York requires quarterly tax filings for unemployment insurance taxes.
Domestic Workers Bill of Rights (DWBR)
New York has a Domestic Workers Bill of Rights (DWBR) which includes requirements about overtime requirements, payroll documentation, days of rest, and other protections for your employees. A detailed list of requirements for employers can be found here.
HWS WILL HELP YOU DO THE RIGHT THING
HWS knows that most families want to pay their household employees legally and ensure that the employee receives workers compensation and unemployment insurance protections. You also want to establish a principled relationship with your employee who is caring for and interacting with precious family members. Getting the relationship started on the right footing, including complying with legal and tax formalities, helps set the tone for the relationship.