4 Major Changes to Household Employment in 2018

If you employ a nanny, caregiver, or other household employee, you probably don’t have time to stay up on the changes we see every year to household employment, payroll, tax, labor and human resources-related laws. But, just the same, you’re responsible for following the laws. So we’ve tried to gather the most significant changes that are likely to affect your household. Here are the four major areas impacting families once the New Year begins:

1. The “Nanny Tax” threshold increases to $2,100. This is how much families can pay a household employee (nanny, senior caregiver, personal assistant, etc.) before they are responsible for withholding taxes from the employee’s pay, and paying employment taxes of their own. For families hiring temporary employees or summer nannies, this is especially important. The $2,100 threshold is up from $2,000 the previous two years and applies to an employee’s pay for the entire calendar year.
    
2. Minimum wage increases in 18 states, 16 cities and 3 counties. While federal minimum wage has not increased from $7.25 per hour since 2009, states, cities and counties are free to enact their own minimum wage rates. When multiple minimum wage rates are present, families must follow the higher rate. Please check the requirements in your state to make sure you’re in compliance.
    
3. Paid sick leave laws go into effect in Washington, Vermont, St. Paul, MN. Over the past few years, there has been a growing trend of guaranteeing paid sick time for employees. Starting in 2018, there will now be 6 states, 24 cities and 2 counties that require paid sick time or paid time off for household employees.
    
4. Mileage reimbursement rate increases to 54.5 cents per mile. The IRS sets this rate every year and increased it from 53.5 cents per mile in 2017. A few states require mileage reimbursement, but we recommend all families reimburse their household employee if they require them to drive their vehicle while on the clock. Miles driven commuting to and from the family’s home do not count as reimbursement miles.

For more resources on managing your household employee, check out HomePay by Care.com.

This article is adapted from Care.com HomePay.

by Tom Breedlove

Tom has been a member of the HomePay team for the last 15 years. He has worn many hats during his time with us, but currently works with thousands of staffing professionals, care managers, accountants, trustees, financial advisors and attorneys that have clients needing household employment support.

Co-author of The Household Employer’s Financial, Legal & HR Guide, Tom leads all education and outreach efforts on this complex topic. His work has helped HomePay become the featured expert on dozens of TV and radio shows, as well as countless business, consumer and trade publications. He also has conducted CPE lectures for more than a dozen professional organizations, including AICPA, NAEPC, AADMM, CPAacademy and Alliance of Comprehensive Planners.

Tom holds a BBA in finance with a minor in accounting from the University of Texas. Throughout his career, he’s been an active volunteer and speaker in the financial, marketing and care industries. If you’re ever at a conference where household employment is on the schedule, chances are, you’ll see Tom at the event.