New York Tax and Labor Law Summary
Household employment requirements for families hiring a caregiver in New York
Finding helpful New York nanny tax information is not always easy. That's why we've distilled all the relevant state and federal tax and labor law into this overview. If your eyes begin to glaze over, don't worry. Our service is set up to handle everything for you with guaranteed accuracy and timeliness.
When a family hires someone to perform duties in or around their home, they are considered a household employer. The IRS views the worker whether a nanny, health aide, housekeeper, senior caregiver, gardener, chef, personal assistant, estate manager, etc. as an employee of the family in nearly every case. Misclassifying an employee as an independent contractor (using Form 1099) is considered tax evasion, so please call us if you're not sure how to classify your worker.
NEW YORK HOUSEHOLD EMPLOYMENT TAX RESPONSIBILITIES
Household employers have four primary tax responsibilities. These are sometimes referred to as the New York nanny tax obligations:
1. Withhold Social Security and Medicare from their employees paycheck each pay period. Federal income tax, state income tax and New York City income tax (if applicable) should be withheld based on the employees selections on Form W-4 and Form IT-2104.
*It is not legally required that income taxes be withheld. However, we strongly advise it so that the employee does not have a large tax burden at the end of the year and is not subjected to underpayment penalties.
2. Pay the employers portion of Social Security and Medicare, as well as federal and New York unemployment insurance taxes (FUTA and SUTA) and the New York Re-employment Service Fund Tax.
Good news! There are some tax breaks for dependent care that can help offset these employer taxes. For an estimate of your employer costs, your tax breaks and your employee's take-home pay, give us a call. In addition to the tax breaks just mentioned, household employers in New York may be entitled to additional state tax credits for childcare-related expenses. Please call for details.
3. File tax forms with the New York Department of Labor, typically on a quarterly basis, and with the IRS in April, June, September and January. With these filings, employers remit (pay) the employee taxes withheld and the employer taxes accrued. If the state income tax withholdings exceed $700 during a calendar quarter, the New York Department of Taxation and Finance requires employers to deposit the state withholdings within 5 business days of crossing the $700 maximum withholding threshold.
4. At the end of the year, prepare Form W-2 and distribute to each employee, file Form W-2 Copy A and Form W-3 with the Social Security Administration and a file Schedule H with your personal income tax return.
NEW YORK LABOR LAW REQUIREMENTS
The Fair Labor Standards Act (FLSA) provides the framework for federal and state wage and hour law. Household employees are classified under the FLSA as non-exempt workers with few exceptions. Non-exempt workers in all 50 states are covered by the rules and protections of the FLSA. The state of New York, as well as city governments, may supplement federal law with additional state and municipal labor laws.
The current New York minimum wage rate: $11.80 per hour.
New York City minimum wage rate: $15.00 per hour.
Nassau, Suffolk & Westchester County minimum wage rate: $13.00 per hour.
Note: Whenever more than one rate applies, employers are required to pay the higher rate.
Additionally, New York employers who pay their employee minimum wage must pay an additional hour of wages if either of the following occur:
- The employee works more than 10 hours in a day
- The employee's hours are split at any point during the day - i.e. 8-10am followed by 1-5pm
Pay Frequency Requirement
Household employers in New York are required to pay their employees on a weekly basis.
New York Overtime Requirements
Overtime requirements are not determined by the amount of hours or by the type of pay (hourly or salary); they are determined by the type of work performed. The FLSA requires domestic workers be protected by overtime laws and the state of New York provides additional overtime protections. Combining both federal and state laws, the requirements for New York household employers are as follows:
- The standard workweek is defined as 40 hours in a 7-day period.
- New York labor law does not allow non-exempt workers to be paid a fixed salary.
- New York household employees who live outside their employers home (live-out employees) are due overtime compensation for hours worked over 40 in a workweek.
- New York household employees who live at their employer's home (live-in employees) are due overtime compensation for or all hours worked over 44 in a workweek.
- The overtime rate of compensation is 1.5 times the regular hourly rate (time-and-a-half).
- New York household employees must be granted one day (24 hours) of rest per week. If an employee agrees to work on the 7th day, all hours worked that day must be paid at the overtime rate.
New York law requires employers to provide employees with a pay stub each payday that includes the following information:
- Employee's name
- Employer's name, address and phone number
- Dates covered by the payment
- Hours worked, including overtime hours when applicable
- Rate(s) of pay, including overtime rate when applicable
- Employee's gross and net wages
- Itemized deductions
- Itemized allowances and credits claimed by the employer, if any
Wage Notice Requirement
New York employers are required to provide all household employees with a written notice at the time of hire and when there is a change in pay rate or payday. The notice should include the following information:
- The employees rate(s) of pay, including overtime rate of pay (if applicable).
- Any allowances the employer intends to claim as part of the minimum wage (tip, meal, lodging allowances, etc.).
- Payroll frequency and regular pay day.
- The employers name, address, and telephone number.
The law also requires employers to receive written acknowledgement of the wage notice from their employees, which must be kept on file by the employer for six years. Typically, this requirement is met by having the employee sign and date the wage notice, but if the employer provides the notice via email, an email from the employee indicating that they have received the notice constitutes sufficient written acknowledgement.
New York employers are required to notify employees in writing before reducing the employee's wage rate or changing any other details on the wage notice. If an employee's pay rate increases before January (when the next wage notice is due), an update to the employee's paystub is sufficient and the employer does not need to provide a new wage rate notice until February 1st.
Payroll Record Requirements
New York employers are required to keep up-to-date weekly payroll records of hours worked by employees and wages paid. These records must be kept on file for six years.
Paid Time Off
New York household employees must be offered a written notice about policies on sick leave, vacation, personal leave and holidays. After a year of employment, New York household employees must be provided paid days off. 1 day for employees working 19 or fewer hours per week, 2 days for those working 20-29 hours per week, and 3 days for employees working 30 or more hours per week.
Paid Family Leave
Household employees in New York working 40 hours or more per week are eligible for Paid Family Leave to help them bond with a child, care for a close relative with a serious health condition, or help relieve family pressure due to active military service. Employees can receive benefits of up to 50% of their weekly wage for up to 8 weeks. Paid Family Leave is funded through a small payroll tax withheld from the employee each pay period.
Job-Protected Sick Leave
All employees in New York must accrue one hour of job-protected sick leave for every 30 hours worked, up to 40 hours per year. Whether the leave must be paid depends on the number of employees and whether the employer is subject to a city/county paid sick leave law. If 5 or more employees, the leave must be paid. If 4 or fewer employees, the leave may be unpaid if the employer resides outside a city/county requiring paid sick leave.
New York City Paid Safe and Sick Leave
Household employers in New York City are required to provide domestic workers with 40 hours of paid safe and sick leave per calendar year. Other important details of the law include:
- Paid sick and safe leave accrues at 1 hour for every 30 hours worked, but employers can choose to provide all 40 hours upfront instead.
- Employers must provide their employee with written documentation of their rights.
- Employers must list the amount of accrued and used paid sick and safe leave on their employee’s paystub, as well as the balance remaining.
Westchester County Safe Time Leave
Household employers in Westchester County are required to provide their employees with paid safe time leave if they become victims of domestic violence or human trafficking. Employees may take up to 40 hours of paid leave in a calendar year to attend or testify in criminal or civil court proceedings or to move to a safe location. Employees can request safe time via oral, written or electronic means, but should give employers as much advanced notice as possible. Employers cannot require their employee to find a substitute as a condition for using safe time. Finally, employers are required to provide their employee with a copy of the Safe Time Leave Law, which can be found here.
Household employers in New York are required to provide a Termination Notice to their employee if they are fired or laid off. Written notice must be given no later than 5 working days after the termination.
Sexual Harassment Training Requirement
Household employers in New York are required to establish a sexual harassment prevention policy. The state has created a sample policy for families, as well as provided resources for the material they may use for training purposes. Families located in a borough of NYC are also required to display this poster.
Employment Poster Requirement
Families are required to notify their employee of their rights by sharing these posters in a location that is readily accessible to them.
The current federal mileage reimbursement rate is 57.5 cents per mile. This rate, which covers the cost of gasoline as well as general wear and tear on the car, should be used to calculate reimbursement payments to an employee who drives their own vehicle while on the job. Mileage reimbursement is not considered taxable compensation, so neither the employee nor the employer is required to pay any taxes on that portion of the compensation.
Note: Miles driven while commuting to and from the jobsite are not considered on-the-job. If the employer reimburses the employee for commuter mileage, it is considered taxable compensation.
INSURANCE FOR NEW YORK HOUSEHOLD EMPLOYERS
Workers' Compensation Insurance
Household employers in New York are required to carry a workers' compensation insurance policy if their employee works 40 or more hours per week or is a live-in employee. Fines for non-compliance can be very high. The policy pays for medical expenses and lost wages if an employee has a work-related injury or illness. We recommend obtaining this valuable coverage even if your employee doesn’t meet the requirements. You can obtain an instant quote and purchase a policy online or by contacting our workers’ compensation advisor, Clarke White, at 804-267-1210 or firstname.lastname@example.org.
Household employers in New York are required to carry a disability insurance policy for all full-time or live-in employees. The employer can deduct up to 60 cents per week to help defray the cost of the policy. The State Disability Insurance Program (SDI) provides Disability Insurance (DI) benefits to workers who cannot work for non-work-related reasons (i.e. maternity leave, accident, illness).
New York unemployment insurance is a state-managed program that provides financial assistance to help laid-off workers make ends meet until they can find another job. This insurance is funded through taxes that employers are required to pay on wages paid to employees. These taxes flow into a general fund and unemployment benefits are distributed from the fund to employees who are let go from their job due to no fault of their own. The New York Department of Labor determines whether or not an applicant qualifies for benefits after reviewing their online or paper application and/or by conducting a telephone interview. Benefits paid to a former employee by the Department of Labor may trigger a future unemployment tax rate increase for the employer.
Household employers in New York are NOT required to pay for their employee's health insurance. However, there is a tax incentive to do so. Families with only 1 employee can make contributions toward their employee's health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer are required to pay any taxes on that portion of the compensation.
Note: Employers with 2 or more employees must set up an Individual Coverage Health Reimbursement Arrangement (ICHRA), a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or purchase a policy through SHOP (Small Business Health Options Program) to gain this benefit. Visit our health insurance page for more information about these options.
The information herein is general in nature and may not be applicable to or suitable for your specific circumstances. Accordingly, the information is not intended to be providing legal or tax advice, and should not be relied upon without the advice and guidance of a professional tax or legal advisor.
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