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

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2023 New Jersey household employment tax and labor law guide

Household employment requirements for families hiring a caregiver in New Jersey

2023 New Jersey household employment tax and labor law guide

Finding helpful New Jersey nanny tax information is not always easy. That’s why we’ve combined all the state and federal tax and labor law information you’ll need! Check out the information below that HomePay is here to help with.

Checklist for New Jersey 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

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 New Jersey are required to get coverage for workers’ compensation insurance. 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 New Jersey are required to notify their employee of their rights by sharing these state posters and local city 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 New Jersey is $12.93/hour.

New Jersey 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. 

Paid leave

State disability leave

The New Jersey Temporary Disability Insurance Program (SDI) provides disability insurance benefits to employees who cannot work because of sickness or injury not caused by their job. The SDI Program is funded by mandatory payroll deductions from employee wages and additional taxes paid by household employers.

Paid family leave

The New Jersey Family Leave Insurance Program provides up to 6 weeks of benefits to employees who need to care for a newborn or newly adopted child, or provide care for a seriously ill family member. The program is funded by mandatory taxes withheld from your employee’s wages.

Paid sick leave

Household employers in New Jersey are required to provide up to 40 hours of paid sick time each year to their employees. Families can choose whether to offer all 40 hours upfront or accrue sick time at 1 hour for every 30 hours worked. Other details of the law families should be aware of are:

  • Any unused sick time must be carried over to the next year, but employers can limit total sick usage to 40 hours per year.
  • Unused sick time does not have to be paid out at termination.
  • Employers can restrict usage of sick time until after 120 days of employment if they choose.
    • Employers in Bloomfield, East Orange, Elizabeth, Irvington, Jersey City, Montclair, Morristown, Newark, Passaic, Paterson, and Trenton can restrict sick time usage until after 90 days of employment. Employers in Plainfield can restrict usage until after 100 days of employment.
  • Employers must display and provide a notice to employees regarding their sick time rights. This notice can be found here unless you live in one of the following cities.
    • Jersey City – Employers should display these two required posters in the workplace.
    • Morristown – You are required to provide your employee with this notice of the details of their sick leave.
    • Plainfield – Employers must provide this written notice upon hiring about sick leave.

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 is 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 65.5 cents per mile and only covers miles driven by your employee while on the job. Miles driven commuting are not eligible for reimbursement.

Ending employment 

Managing unused PTO 

New Jersey household employers do not need to pay their employees for unused sick and/or 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.

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