The federal Fair Labor Standards Act (FLSA) requires most types of employees to be paid at least the federal minimum wage and time-and-a-half for overtime. The FLSA is enforced by the Department of Labor, which may impose fines against employers who violate the FLSA.
You may be surprised to discover that the FLSA applies to household employees if they:
- receive at least $50 in cash wages in a calendar quarter from their employers, or
- work a total of more than eight hours a week for one or more employers.
These federal wage and overtime regulations apply only to household employees, not ICs. Unfortunately, it can be hard to know for sure whether a household worker is an employee or IC under the FLSA. (See the discussion below.) If you’re not sure whether a household worker is an employee or IC, the safest course is to assume he or she is an employee and obey the minimum wage and overtime rules. These rules do not place a very great financial burden on you.
Classifying Workers Under the FLSA
The Department of Labor uses an economic reality test to determine a worker’s status for FLSA purposes. To qualify as an IC, a household worker will generally have to provide services for several different households simultaneously and be able to show some opportunity for profit or loss. Profit or loss can be shown where a worker earns a set fee instead of an hourly wage, or where a worker has business expenses that could exceed business income—for example, salaries for assistants or equipment costs.
Of course, you cannot closely supervise the work of a household worker and expect him or her to qualify as an IC. Instead, your control must be limited to accepting or rejecting the worker’s final results. For example, you can tell a gardener to mow your lawn and rake leaves, but you can’t supervise how he or she does the work. This lack of supervision is impractical for many types of household workers, such as most child care providers.
Any worker who works solely for you and makes no attempt to obtain other clients or customers will almost surely be viewed as your employee by the Department of Labor. For example, a live-in housekeeper or child care provider is almost certainly an employee.
a. Minimum wage laws
The federal minimum wage is $5.15 per hour. However, you may pay a $4.25 per hour training wage to a household worker under 20 years of age for the first three months he or she is on the job.
If your state has established a higher minimum wage, you must pay that amount. In California, for example, the minimum wage is $5.75 per hour. A number of other states also have minimum wage rates higher than the federal minimum. Check with your state labor department to find out what the current minimum wage is in your state. (See Chapter 9, Section F.) In the few states that have a minimum wage lower than the federal rate, the federal rate controls.
You must pay the minimum wage to any nonexempt domestic employee who:
- earns at least $50 in wages from one employer in any calendar quarter, or
- works at least eight hours a week for one or more employers.
If a household employee works less than eight hours a week for you, but works for others as well, you’ll have to find out how many hours he or she works for other employers.
Casual babysitters and people who help care for people who can’t care for themselves are exempt from federal minimum wage requirements if less than 20% of their hours are spent on general household work. But this exemption does not apply to trained personnel whose vocation is babysitting or caring for others—for example, registered and practical nurses.
The Department of Labor defines a casual babysitter as one who cares for others’ children for less than 20 hours per week for all the people he or she works for together. The casual babysitter exemption also applies to a sitter who accompanies your family on vacation, provided that the vacation doesn’t exceed six weeks.
You must pay a household employee the minimum wage regardless of whether payment is made by the hour or with a regular salary. You must pay minimum wage for each hour worked, including all hours an employee must be on duty at your home or at any other prescribed workplace, such as a vacation house. However, you are permitted a credit for the value of room and board you provide to a household employee.
How Room and Board Figure Into Minimum Wage
Under the FLSA, employers may take a credit against minimum wage requirements for the reasonable cost or fair value of food and lodging or other facilities customarily furnished to an employee. But an employer may take this credit only when the employee voluntarily agrees to the arrangement.
Federal and state regulations define appropriate meal and lodging credits. In California, for example, when credit for lodging is used to meet part of the employer’s minimum wage obligation, no more than $20 per week may be credited for a room occupied by one person.
b. Compensation for overtime
Most household employees must be paid overtime at the rate of one and one-half times their regular wage rate for all hours worked beyond a 40-hour workweek. In computing overtime pay, you must treat each workweek separately—that is, you can’t average hours over two or more weeks.
You do not have to pay overtime to an au pair, housekeeper or other household employee who lives in your home. You must, however, pay the minimum wage for each hour worked.
Overtime is also not required for people who help care for people who can’t care for themselves.