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Michigan tax and labor law guide

Household employment requirements for families hiring a caregiver in Michigan

Most families know they have tax and payroll responsibilities when they hire someone to work in their home – they just don’t know exactly what those are or how to do things correctly. That’s why we’ve made this Michigan nanny tax guide. Check out the information below that HomePay is here to help with.

Checklist for Michigan household employers

We know you’re busy! 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 

Workers’ compensation

Household employers in Michigan are required to carry a workers’ compensation insurance policy if their employee works 35 hours or more per week for at least 13 weeks during a 52 week period. 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 posters 

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

During employment 

Minimum wage rates

The current minimum wage in Michigan is $7.25/hour, or $9.87/hour if you have 2 or more employees.

Michigan 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 not required to be paid overtime. 
  • Overtime is not required to be paid when work is performed on a holiday. 

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.  

Mileage reimbursements

The current federal mileage reimbursement rate is $0.56 per mile and only covers miles driven by your employee while on the job. Miles driven commuting are not eligible for reimbursement.

Ending employment 

Termination notice requirement

Household employers in Michigan are required to provide a termination notice to their employee if they have to let them go from their job.

Managing unused PTO 

Michigan household employers do not need to pay their employees for unused sick and/or vacation time.

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