2023 California household employment tax and labor law guide - Care.com HomePay

2023 California household employment tax and labor law guide

Household employment requirements for families hiring a caregiver in California

Learning all the nuances of California nanny tax law is no easy task. To help, we’ve created this overview of everything you need to know about being a household employer in California.

Checklist for California household employers

We know you’re busy so here’s a quick “to-do” list with links to extra details below.

Beginning of employment 

During employment 

Optional benefits for your employee

Ending employment

Beginning of employment 

Set up EIN & state tax account(s)

You must first apply for a EIN (Employee Identification Number) with the IRS. This will be used as your unique ID with both state and federal tax authorities. Then you can open an account with your state taxing authority.

Workers’ compensation

Household employers in California are required to carry a workers’ compensation insurance policy to help employees with medical expenses and lost wages from work-related injury or illness. These policies also provide protection to employers. Workers who accept benefits generally forfeit their right to sue the employer, regardless of fault. 

Some level of workers’ compensation is usually provided in homeowners insurance. Household employers should contact their insurance provider to see if their current plan is sufficient. If not, an enhancement can usually be added to cover a household employee.

Wage notice 

California employers are required to provide all household employees with a written notice at the time of hire and upon any wage changes. 

Employment posters 

The state of California requires families to share these posters with their employees to notify them of their rights. Your city may also have a similar requirement, so view these posters as well to see if you need to share additional resources.

During employment 

File returns, remit taxes and manage correspondence

  • File state employment tax returns throughout the year and remit state employer and employee taxes.
  • Remit federal employer and employee taxes via 1040-ES estimated tax payment voucher four times each year.
  • Each year end, prepare Schedule H and file with Form 1040; prepare and distribute Form W-2 to each employee; file Form W-2 Copy A/Form W-3 with the Social Security Administration (SSA).
  • Manage ongoing alerts and notices from the state (tax rates and labor law is subject to change at any time).

Minimum wage rates

  • California state: $15.50/hour
  • Alameda: $15.75/hour
  • Belmont: $16.75/hour
  • Berkeley: $16.99/hour
  • Berlingame: $16.47/hour
  • Cupertino: $17.20/hour
  • Daly City: $16.07/hour
  • East Palo Alto: $16.50/hour
  • El Cerrito: $17.35/hour
  • Emeryville: $17.68/hour
  • Foster City: $16.50/hour
  • Fremont: $16.00/hour
  • Half Moon Bay: $16.45/hour
  • Los Altos: $17.20/hour
  • Los Angeles county: $15.96/hour
  • Los Angeles: $16.04/hour
  • Malibu: $15.96/hour
  • Menlo Park: $16.20/hour
  • Milpitas: $16.40/hour
  • Mountain View: $18.15/hour
  • Novato: $15.53/hour
  • Oakland: $15.97/hour
  • Palo Alto: $17.25/hour
  • Pasadena: $16.11/hour
  • Petaluma: $17.06/hour
  • Redwood City: $17.00/hour
  • Richmond: $16.17/hour
  • San Carlos: $16.32/hour
  • San Diego: $16.30/hour
  • San Francisco: $16.99/hour
  • San Jose: $17.00/hour
  • San Mateo: $16.75/hour
  • Santa Clara: $17.20/hour
  • Santa Monica: $15.96/hour
  • Santa Rosa: $17.06/hour
  • Sonoma: $16.00/hour
  • South San Francisco: $16.70/hour
  • Sunnyvale: $17.95/hour
  • West Hollywood: $17.00/hour

Note: Whenever more than one minimum wage rate applies, employers are required to pay the higher rate.

California overtime requirements

California labor law does not allow household employees to be paid a fixed salary. Overtime pay varies on if your employee resides in your home and whether they are a personal attendant. The state defines a personal attendant as someone who spends at least 80% of their time caring for a child or elderly person. Based on this distinction, California overtime rules are as follows: 

  • Personal attendant: Must be paid 1.5x their hourly rate for all hours worked over 9 in a day and/or 40 in a 7-day workweek.
  • Live-in personal attendant: Must be paid 1.5x their hourly rate for all hours worked over 9 in a day and/or 45 hours in a workweek. 
  • Non-personal attendant: Must be paid 1.5x their hourly rate for all hours worked over 8 in a workday. 
  • Live-in non-personal attendant: Must be paid overtime for all hours worked over 9 in a day.

Note: There are additional overtime requirements for non-personal attendant employees that work 12 or more hours in a day or 6 or 7 consecutive days in a workweek. Please call our office for details if this employment situation arises for you.

Mileage reimbursement

California employers must reimburse their employee if they are required to drive their own vehicle on the job. The current federal mileage reimbursement rate is 65.5 cents per mile and miles driven commuting are not eligible for reimbursement.

Pay stub requirement

California law requires employers to provide employees with a pay stub each payday. It should include the employee’s:

  • Hourly rate;
  • Hours worked in the pay period;
  • Gross wages;
  • All deductions taken;
  • Net pay.

Disability insurance

The California State Disability Insurance Program (SDI) provides disability insurance and Paid Family Leave benefits to eligible workers who cannot work for non-work-related reasons (i.e. maternity leave, accident, illness). The SDI program is funded by mandatory payroll deductions from your employee’s wages.

Paid sick leave 

Household employers in California are required to provide up to 24 hours of paid sick time each year to their employees. HomePay will track sick time accruals on your account. 

  • West Hollywood employers must provide up to 96 hours of sick leave per year.
  • Berkeley, Emeryville, Los Angeles and Oakland employers must provide up to 48 hours of sick leave per year. 
  • San Diego, San Francisco and Santa Monica employers must provide up to 40 hours of sick leave per year.

Optional benefits for your employee 

Health insurance

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.

Families with 2 or more employees have 3 options:

  1. Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
  2. Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
  3. Purchase a policy through SHOP (Small Business Health Options Program). 

Visit our health insurance page for more information about these options.  

Ending employment 

Termination notice 

Household employers in California are required to provide a Change in Relationship Notice to their employee at the time they are fired or laid off.

Managing unused PTO 

California household employers do not need to pay their employees unused sick time. However, unused vacation time must be paid out.

Close down your state employment tax account(s)

The state tax agencies expect you to file timely returns for as long as your tax accounts are open — even to report $0 in wages paid.

Maintain payroll records

Household employers are required to keep wage records on file for at least three years.

The information contained in this article is general in nature, may not be applicable to your specific circumstances, and is not intended to be a substitute for or relied upon as personalized tax or legal advice.

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