The True Cost of Hiring Private Duty Home Care

I have often warned my clients and their families about the pitfalls of hiring private duty caregivers. In fact, I even discuss it in my book, “A Pathway To Senior Care in San Diego.”

I recently heard something so very upsetting that I had to write about it for all to see.

There is currently a lawsuit being prepared in San Diego that will probably be won for over $80,000. I cannot give you specifics as it’s still being decided, but here is the gist of it.

Mrs. Naive Person

Caregiver, Suzy Q., was hired by Mrs. Naive Person to take care of her ailing husband. Suzy Q worked for them for a few months as an “under ground”, or private, employee. Mrs. Naive Person paid her an hourly wage, “under the table”, and nothing more. When the ailing husband passed away, Suzy Q decided that she hadn’t been treated as a proper “employee”. She’d not be allowed to file for Unemployment, she wasn’t paid any benefits, she wasn’t covered for workman’s comp. or social security, or taxes, and she wasn’t given her proper breaks per the EDD Labor Laws. So, Suzy Q has called a lawyer who has taken on the case and is prosecuting Mrs., now widowed, Naive Person for $80,000!!!

Now, there are two ways of looking at this and I have trouble deciding which banner to uphold. My ethical side wants to go with the legality of the situation while my heart wants me to defend Mrs. Naive Person. Ethics will always win in this battle, however…

Let’s take a look at this more closely: poor widowed Naive Person will now be liable for $80,000, or more! Simply, one might say, because she was trying to save a few dollars on the front side of this care giving situation. When hiring someone for long durations at multiple hours the difference between $12/hr and $20/hr may seem huge. Let’s do the math. Say you need someone 40 hours a week, that seems like a “savings” of $320 per week.

I feel very badly for Mrs. Naive Person. With a final bill of $80,000 that is 250 weeks, more than six months, worth of “savings”. Where is she going to come up with $80,000+? I doubt highly that she thought to put this money aside, just in case. So, will it come from her husband’s Life Insurance? Their savings? Her home? What will this leave for her to live on? How will she be able to care for herself? I can’t even imagine what’s going through her mind. How devastated she must feel. First loosing your spouse and now all of this!?!?!

We need to look at the legal and ethical sides of this issue.
Here is what the IRS.com website has to say about it: (When referring to “business owner” here that can include a private person hiring an individual.)

“It is critical that you, the business owner, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. If you are an independent contractor and hire or subcontract work to others, you will want to review the information in this section to determine whether individuals you hire are independent contractors (subcontractors) or employees.”
Common Law Rules:

Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

Consequences of Treating an Employee as an Independent Contractor:

If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information.

Even if you file a 1099 for their taxes this does not mean that they are absolutely an “independent contractor”. You must go by the definitions listed above.

Additionally, as an “Employer” there are requirements mandated by The Employment Development Department of CA. Minimum wage; Overtime pay; proper breaks and sleep periods; posted rights and notifications in the workplace; and more.

There is a third “side” to this situation, as well. CLIENT SAFETY!!! What if Suzy Q saw fit to rob Mr. Ailing Husband and Mrs. Naive Person by, say, using their credit cards without permission. Or, coercing them into signing checks to her. Or, taking their belongings. Worse can happen to the innocent and unsuspecting. There’s physical abuse, verbal abuse, neglect and more. How can anyone “hiring” their own caregivers determine if these persons are reputable? Safe? Sound of mind? A person having suffered an abuse of these natures generally has a shorter life expectancy due to the physiological, physical and emotional stress that abuse brings.

So, “what is the answer?” you may be asking. HIRE A Certified Home Care Agency! Yes, you’ll pay a few more dollars on the front side but all of these worries will be covered. The caregiver will be supervised, paid, insured, cleared through a back ground check, etc. When looking for a care giving agency, please be sure that they are certified through reputable sources such as CAHSAH, ABHC , or other such accreditation organizations. Or call us to help you find a certified agency that works in your area and within your budget and care needs.

written by: Nancy Beland, author and owner of Starfish Resources, llc.

The True Cost of Hiring Private Duty Home Care

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