Oregon Tax and Labor Law Summary
Household employment requirements for families hiring a caregiver in Oregon
Handling all the Oregon nanny tax requirements isn't as hard as you think - as long as you know where to get the right information. Below, find everything you need to know about the household employment tax and payroll process and call our office if you'd like for us to do everything for you.
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.
OREGON HOUSEHOLD EMPLOYMENT TAX RESPONSIBILITIES
Household employers have four primary tax responsibilities. These are sometimes referred to as the Oregon nanny tax obligations:
1. Withhold Social Security and Medicare taxes from their employee's paycheck each pay period. Federal and state income taxes should be withheld based on the employee's selections on Form W-4.
* 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 employer's portion of Social Security and Medicare, as well as federal and Oregon unemployment insurance taxes (FUTA and SUTA).
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 tax-home pay, give us a call.
3. File tax forms with the Oregon Department of Revenue (DOR) and the Oregon Employment Department (OED), typically on an annual 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.
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 file a Schedule H with your personal income tax return.
OregonSaves Employee Retirement Account
Household employers are required to register with OregonSaves, a program which allows their employee to invest part of their post-tax wages into an IRA account. Once families register and add their employee’s information, the employee is opted into the program and can choose what percentage of their wages are invested into their IRA each pay period. Families are then required to withhold this amount and send it to the state. Employees can opt out of OregonSaves if they choose. As part of the HomePay service, we can add a line item to your employee’s payroll for you, but we won’t be able to make the payments on your behalf. You can find more information about OregonSaves here.
OREGON 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. Non-exempt workers in all 50 states are covered by the rules and protections of the FLSA. Oregon may supplement federal law with additional state and municipal labor laws.
The minimum wage rate in Oregon is dependent on the county where the work is performed.
$11.50 per hour for household employers living in Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morror, Sherman, Umatilla, Union, Wallowa and Wheeler counties.
$12.00 per hour for household employers living in Benton, Clastsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco and Yahmill counties.
$13.25 per hour for household employers living in Washington, Multinomah and Clackamas counties.
Oregon 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. The requirements for Oregon household employers are as follows:
- The standard workweek is defined as 40 hours in a 7-day period.
- Oregon employees should be paid at least 1.5 times the regular hourly rate (time-and-a-half) for all hours worked over 40 in a workweek.
- Household employees must be given at least 24 consecutive hours of rest each calendar week if they work 40 or more hours. If the employee agrees to work on their day of rest, they must be paid overtime for each hour they work that day.
- Overtime compensation is required for live-in employees that work more than 44 hours in a workweek.
- Overtime is not required to be paid when work is performed on a holiday.
Paid Time Off
Household employers in Oregon are required to provide 3 paid days off to their employees if they have been employed for at least 1 year and worked an average of 30 hours per week.
Sick Time Requirement
Household employers in Oregon are required to provide up to 40 hours of unpaid sick time to their employees every calendar year. (Paid sick time is only for employers with at least 10 employees - or 6 employees for employers in Portland). Sick time accrues at 1 hour for every 30 hours worked and can roll over from year to year as long as the total sick time accrued is not more than 40 hours. We're happy to set up accruals for your employee when you get started with our service.
Employment Poster Requirement
Families in Oregon are required to notify their employee of their rights by sharing these posters in a location that is readily accessible to their employee.
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 OREGON HOUSEHOLD EMPLOYERS
Workers' Compensation Insurance
Household employers in Oregon are not required to carry a workers' compensation insurance policy. However, we recommend obtaining coverage because it assists with medical expenses and lost wages if an employee has a work-related injury or illness. It also provides protection to the employer since workers who accept benefits generally forfeit their right to sue the employer regardless of fault. You can get 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.
Oregon 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 Oregon Employment Department (OED) 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 OED may trigger a future tax rate increase for the employer.
Household employers in Oregon 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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