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

2023 Massachusetts household employment tax and labor law guide

Household employment requirements for families hiring a caregiver in Massachusetts

Finding accurate Massachusetts nanny tax information can be time-consuming. We’re here to help with this overview of everything domestic employers need to know about tax, payroll and labor laws. Check out the information below that HomePay is here to help with.

Checklist for Massachusetts 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 Massachusetts are required to carry a workers’ compensation insurance policy if their employee works 16 hours or more per week. These policies pay for medical expenses and lost wages if an employee has a work-related injury or illness. Obtain an instant quote and purchase a policy online, or contact our partner, Clarke White, at 804-267-1210 or wcnanny@allrisks.com.

Employment contract 

Household employers in Massachusetts are required to provide an employment contract to their employee if he or she works 16 hours or more in a week. Additionally, families must provide a written evaluation of the employee’s work performance after 3 months of employment and annually thereafter if their employee requests it.

Employment posters 

Families in Massachusetts are required to notify their employee of their rights by sharing these posters.

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 rate

The current minimum wage in Massachusetts is $15.00/hour.

Massachusetts overtime requirements

  • Live-out employees must be paid 1.5x their hourly rate for all hours worked over 40 in a workweek.
  • Live-in employees are required to be paid overtime. 
  • Overtime is not required to be paid when work is performed on a holiday. 
  • Massachusetts household employees must be given at least 24 consecutive hours of rest each calendar week and 48 consecutive hours of rest per month 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.

Mileage reimbursements

Massachusetts employers must reimburse employees 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.

Unpaid sick time

Household employers in Massachusetts are required to provide up to 40 hours of unpaid sick time to their employees per year.

Maternity leave

Massachusetts household employees are allowed to take up to 8 weeks of unpaid maternity leave if they have worked full-time for the previous 3 months. Employers are required to hold the employee’s job if they decide to return to work.

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 requirements

Household employers in Massachusetts are required to provide their employee with a termination notice when they are let go from their job that explains their right to unemployment benefits.

If a live-in employee is let go without cause, families must give written notice and either:

  • Let the employee continue living in their home for at least 30 days;
  • Pay for 30 days of comparable off-site housing; or
  • Give 2 weeks of severance pay to the employee.

Managing unused PTO 

Massachusetts household employers do not need to pay their employees for unused sick time, but are required to pay out any unused vacation time.

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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