I recently spoke with Robert E. King, the founder of Legally Nanny, a law firm representing household employees and domestic employment and homecare agencies. King specializes in household employment legal and tax issues and has served as an expert witness in household employment matters.
He wrote an excellent article in the Riverside County Bar Association Journal which emphasizes why it is so important to hire in-home care help from a licensed, bonded agency who's caregivers are employees of that agency (not independt contractors).
Both he and the Journal allowed me to re-print the article and we thought it would be of interest to many. We are re-printing it here in its entirety.
You’re a busy attorney trying to juggle work and family. To help care for your children, you hire a nanny. Or perhaps your parents are getting older and need some help around the house, and you hire an elder care provider or companion to care for them.
Because you think you’ll never get caught, you’ve heard that it costs so much more to hire legally, and hey, let’s face it, you weren’t planning on being Attorney General any time soon, you think it’s safe to hire someone under the table. Think again.
The decision to hire someone “under the table” – although it may seem easier and cheaper – ultimately is penny-wise and pound-foolish. If (and most likely, when) you get caught, you will have committed federal tax fraud and endangered your ability to practice law. Even if you don’t get caught, you’ll be missing out on legal and tax advantages that would have applied if you were paying legally. In short, don’t do it.
Admittedly, hiring a nanny, elder care provider or other household employee legally can be daunting. There are many legal, tax and insurance questions that can make employing someone seem like an onerous task. On closer examination, however, hiring a nanny or other household employee can be a straightforward process that benefits both the employer and employee.
Getting Caught
There are many ways – such as your nanny filing for unemployment (a very common occurrence in today’s difficult economy), social security, disability or workers’ compensation benefits – that even an amicable parting between you and your nanny could result in you facing an investigation for unpaid taxes. And these are just the unintentional examples. They don’t include your disgruntled nanny, upset over some perceived slight, quitting and turning you in herself – or worse yet, trying to blackmail you. Or the neighbor or co-worker or family member who is envious or has always had a grudge against you reporting you. Or perhaps the IRS decides to audit you and notices the same amount of money flowing out of your bank account every two weeks and gets suspicious.
Under any of these scenarios, the result is the same: You get caught and face considerable consequences.
The Consequences
Because you must report household employment taxes on your personal federal tax return, failure to pay the appropriate taxes constitutes federal tax fraud. At a minimum, the consequences include payment of all back taxes, penalties and interest, and they can include federal charges of perjury and tax evasion, fines of up to $250,000, imprisonment for up to five
years, and a criminal record for the rest of your life. There is no statute of limitations for failure to report and pay federal employment taxes.
The professional consequences are equally severe. For example, Business and Professions Code section 6068, subdivision (o)(4) requires that if you’re charged with a felony such as tax fraud, you must report the charge to the State Bar, potentially jeopardizing your ability to practice and earn a living. Additionally, if you’re even considering becoming a judge or holding elected or appointed office, having a “Nannygate” story break about you, just as it did with Bernie Kerik,
Zoe Baird, Kimba Wood, or Linda Chavez, can ruin your reputation and career.
Regardless of your interest in higher office, as an attorney, you trade on your reputation for integrity, and being labeled a “tax cheat” isn’t good for anyone’s business.
Advantages of Hiring Legally
Happily, there are a number of advantages to hiring a nanny or other household employee legally. For example, you may be able to save taxes by putting up to $5,000 pretax per family per year into a Dependent Care Account (“DCA”) to help pay for your nanny. Alternatively, you may be eligible to claim the federal Child and Dependent Care Tax Credit, for a minimum tax credit of 20% for the first $3,000 in qualifying expenses for each of up to two children per year. Most importantly, you get to spend more time with your family and sleep well at night knowing that you’ve done everything legally. Don’t underestimate how Riverside Lawyer, February 2009 worrying about getting caught and the consequences of hiring illegally can take a toll on you personally and professionally.
Your Bottom Line
Perhaps the most common fallacy about employing a nanny or other household employee legally is that it will greatly increase your expenses. A review of the additional costs, especially in light of the significant potential tax savings, reveals this contention to be inaccurate.
Social security, Medicare, and state and federal unemployment taxes add approximately 9% of a nanny’s salary to the typical household employer’s costs. However, by maximizing your tax advantages, the true “burden” of hiring a nanny can be substantially less, as little as 4% of your costs.
An example best illustrates the true cost. The approximate 9% tax burden on a nanny’s $30,000 annual salary likely would cost her employer roughly $2,700. However, the employer could shelter $5,000 pretax in a DCA and use this money toward paying the nanny.
The employer normally would pay approximately 30% in taxes on $5,000 in earnings, taking into account the employer’s personal income taxes and other payroll taxes. Thus, the employer’s tax savings from using the DCA would be approximately $1,500. Subtracting this $1,500 savings from the roughly $2,700 paid in taxes yields an effective “cost” of approximately $1,200, or 4% of the nanny’s annual compensation.
Thus, in this typical example, the bottom-line cost of hiring someone legally is approximately 4%
more, a small price to pay for the peace of mind that comes along with hiring your nanny legally.
Remember, paying employment taxes isn’t an option, it’s the law.
For more information, you may contact the firm at (714) 336-8864 or at info@legallynanny.com.
Saturday, April 25, 2009
Tuesday, April 21, 2009
Passing Away
When you work in the Senior Care business there is one fact-of-life that you cannot escape - and that is the end of it.
Recently, my stepfather passed away. An amazingly outgoing and friendly man, he was diagnosed with pancreatic cancer and passed away 3 weeks later. On his final morning in his home, he suffered tremendous stomach pain but waited until my mother woke up before telling her that he thought he should go to the Emergency Room. After a few days in the hospital he refused any treatment and only requested pain medications and passed away. The doctor called him "very brave" for his decision.
Dealing with the elderly and how you handle your final years is - if nothing else - an eye-opening experience. And if I've learned one thing it is that the saying "Life is for the living" is about as accurate a cliche as there is. Rich or poor, male or female - if we are so limited at the end of our life that we're forced to live much of it at home or - less desireable - in a nursing home - than no matter how much money we've saved, no matter how many different caregivers we have, there is little we can do except try to be as comfortable as possible.
In the last week, 2 clients of ours also passed away.
One was our client for 10 months and we'd cared for her son and daughter (both stricken with cancer) as well. All she wanted to do was stay at home with her dog and she was able to fulfill that wish until she passed away peacefully in her sleep.
The other was a client of ours for 36 hours. On Hospice and dealing with a myriad of ailments including a collapsed lung, she requested that her oxygen be removed and slowly went away from this world. Similar to my stepfather, she was by all accounts a gregarious person who demanded to be discharged from a Respiratory hospital less than a week before despite her doctor's protestations. She knew she was going to die but she was going to do it on her terms.
Within that same week, we started cases with 4 additional clients - ranging from a 26-year-old male dealing with a devastating injury to seniors who still have plenty of fuel to go. In the homecare business, clients come and clients inevitably go.
But what my stepfather, as well as our two dearly departed clients, teach us is that life is indeed for the living - and what that means and how we choose to deal with the end of it is unique to each and everyone of us.
Recently, my stepfather passed away. An amazingly outgoing and friendly man, he was diagnosed with pancreatic cancer and passed away 3 weeks later. On his final morning in his home, he suffered tremendous stomach pain but waited until my mother woke up before telling her that he thought he should go to the Emergency Room. After a few days in the hospital he refused any treatment and only requested pain medications and passed away. The doctor called him "very brave" for his decision.
Dealing with the elderly and how you handle your final years is - if nothing else - an eye-opening experience. And if I've learned one thing it is that the saying "Life is for the living" is about as accurate a cliche as there is. Rich or poor, male or female - if we are so limited at the end of our life that we're forced to live much of it at home or - less desireable - in a nursing home - than no matter how much money we've saved, no matter how many different caregivers we have, there is little we can do except try to be as comfortable as possible.
In the last week, 2 clients of ours also passed away.
One was our client for 10 months and we'd cared for her son and daughter (both stricken with cancer) as well. All she wanted to do was stay at home with her dog and she was able to fulfill that wish until she passed away peacefully in her sleep.
The other was a client of ours for 36 hours. On Hospice and dealing with a myriad of ailments including a collapsed lung, she requested that her oxygen be removed and slowly went away from this world. Similar to my stepfather, she was by all accounts a gregarious person who demanded to be discharged from a Respiratory hospital less than a week before despite her doctor's protestations. She knew she was going to die but she was going to do it on her terms.
Within that same week, we started cases with 4 additional clients - ranging from a 26-year-old male dealing with a devastating injury to seniors who still have plenty of fuel to go. In the homecare business, clients come and clients inevitably go.
But what my stepfather, as well as our two dearly departed clients, teach us is that life is indeed for the living - and what that means and how we choose to deal with the end of it is unique to each and everyone of us.
Saturday, April 11, 2009
When Caregivers Fail to Show
There are a lot of frustrating things to owning any business, but unique to owning a homecare business is that your employees are scattered throughout your service area. And when your service area is as large and diverse as Los Angeles, that causes more than a fair share of stress.
At Right at Home, we have an automated check-in system. When a caregiver arrives at the home of a client, they call a toll-free number from the clients home (not their cell) and clock in and out remotely. If they're late, I receive a text message and email notifying me of this. It's one of the many things has made Right at Home so respected throughout the industry.
While almost every day some caregiver somewhere is late and occassionally caregivers get their schedules mixed up and don't show up (and on a very rare occassion have chosen to tell us they quit by simply not showing up to a case and we never hear from them again), we work hard on screening our employees and have a relatively few such incidents.
With that said, the most unsettling times are the weekends when the office staff is off. And when you toss in a holiday weekend such as this Easter weekend, you stomach begins to immitate a Shawn Johnson floor routine.
This happend to us today when a caregiver failed to show for her normal Saturday shift with one of our most difficult clients. When we called her, she told that our staffing coordinator had said she had the weekend off. We informed her that it was just Easter Sunday she had off, not the entire weekend but by that time it was too late - she had made plans for the weekend and was unable to fill the shift.
At Right at Home we never leave a case uncovered and after seven (7) unsuccessful calls, our Director of Patient Care Services filled the case herself. And while this didn't particularly please the client (who felt she could just have easily been left to her own devices anyway) the daughter was thankful for our quick action.
It does beg the question, though, do a lot of other business encounter such scheduling issues?
At Right at Home, we have an automated check-in system. When a caregiver arrives at the home of a client, they call a toll-free number from the clients home (not their cell) and clock in and out remotely. If they're late, I receive a text message and email notifying me of this. It's one of the many things has made Right at Home so respected throughout the industry.
While almost every day some caregiver somewhere is late and occassionally caregivers get their schedules mixed up and don't show up (and on a very rare occassion have chosen to tell us they quit by simply not showing up to a case and we never hear from them again), we work hard on screening our employees and have a relatively few such incidents.
With that said, the most unsettling times are the weekends when the office staff is off. And when you toss in a holiday weekend such as this Easter weekend, you stomach begins to immitate a Shawn Johnson floor routine.
This happend to us today when a caregiver failed to show for her normal Saturday shift with one of our most difficult clients. When we called her, she told that our staffing coordinator had said she had the weekend off. We informed her that it was just Easter Sunday she had off, not the entire weekend but by that time it was too late - she had made plans for the weekend and was unable to fill the shift.
At Right at Home we never leave a case uncovered and after seven (7) unsuccessful calls, our Director of Patient Care Services filled the case herself. And while this didn't particularly please the client (who felt she could just have easily been left to her own devices anyway) the daughter was thankful for our quick action.
It does beg the question, though, do a lot of other business encounter such scheduling issues?
Tuesday, March 24, 2009
A Year Navigating the Los Angeles Caregiving Maze
A little over a year ago, I opened up a business that would provide trained and licensed caregivers to take care of elderly adults in their homes throughout Los Angeles county. I had never worked in this industry before - the extent of my experience working with seniors being primarily limited to occasional discussions with members of the Silver Lake Seniors group while I served as co-chair on the Silver Lake Neighborhood Council - but nevertheless in January of 2008 I registered Right at Home in Glendale as a business with the California Secretary of State.
But it seemed like something I would like to do and certainly the need existed. Besides, after 10 years working in sales and marketing in television, the prospect of both working for myself as well as working outside the entertainment industry was beyond appealing.
Over the course of the past 12+ months, I've learned an immense amount regarding caring for seniors and disabled adults as well as the sometimes bizarre world that is senior care in Los Angeles. The lack of regulation, the lack of efficacy and at times the shocking lack of judgement shown not just by homecare agencies operating under the table and relatives of patients who would just rather their mom or dad go away, but of hospital nurses, assisted living facilities, hospice companies and more.
Please don't misunderstand me. I'm not indicting the entire industry by any means. Still, if you walked the past year in my shoes and witnessed some of the things I have, your already skeptical view of the medical industry wouldn't likely decrease.
Still, today marked a day as to why this industry not only does employ many a fine person, but also gave me some indication that my company is beginning to form leaves on the branches we've so tirelessly attempted to grow.
After dropping off some brochures at Good Samaritan Hospital, I met with William Hwang, the President of Advantage Home Health. I stopped by without notice and he was kind of enough to sit down with me and discuss our services and how we could work together. Cold calling is tough and not always pleasant and sometimes the reaction you receive will do anything but warm your heart. So to have William take the time to speak with me - and with a smile to boot - set the tone for a positive day.
Afterwards, while driving to my next sales stop, I received a call from Bob King, a lawyer specializing in domestic care law out of Orange County. I had contacted Bob after reading an article he'd written in the Riverside County Bar Association journal regarding the "high price" of hiring care "off-the-books" (read illegally). He could not have been more generous with his time as we discussed the vagaries of wages for Live-In care and allowed me permission to use his article in my future presentations.
After another stop, I made my way to St. Vincent's Medical Center for a presentation to their Physical Therapists. I invited two (2) others to join me - Thomas Tilahun from Oceanside Home Health and Michele Lefever from ResponseLink. It was the first time I'd partnered with other companies on a presentation, but something I've wanted to do. I'd had success working with other neighborhood councils during my public service days as well as partnering with other companies in my television career and didn't see why more of this couldn't be done among those serving various parts of the homecare industry.
While Physical Therapists are not necessarily the first folks I look to market to at hospitals. That honor - or burden depending on how you look at it - goes to Social Workers, Case Managers and Discharge Planners. However, PT's can also be of help and I was thrilled to work with Dee Gilmore at St. Vincent's in setting this up. It was a nice group of folks who listened politely to all three of us, while devouring the pizza, soda (Pepsi, Diet Pepsi and, that's right, Sierra Mist too) and cinnamon sticks we bought for them from Pizza Hut (it was supposed to be cheese sticks, but they were out of cheese sticks, so they could give me 2 more pizza's, but I didn't need 2 more pizza's, well then what about cinnamon sticks, what's a cinnamon stick, it's like a cheese stick but with cinnamon-it will only takes us a few minutes to make them, why not put cheese on them instead of cinnamon, I make you cinnamon sticks). Thomas is a great guy and while I just met Michele and didn't want to overextend my relationship with her as I do work with another emergency response company, it seemed like we would work well together. All in all, it was a successful trip.
Finally, as I made my way back to the office, I received a call from a woman looking for a caregiver in Canoga Park. After a discussion that, if we were in a scene from Enchanted April could be described as nothing less than "delightful", we set up a meeting for this Thursday.
The highs and lows of running your own business can be extreme - and it doesn't help that I'm not always the most even-keeled person in the world despite what my outside demeanor may appear. Still today, I very much look back at it being a culmination of a year's worth of incredibly hard work and a steep learning curve. Not one thing I accomplished today could I have done a year or likely even 6 months ago. And for that, I am grateful. Plus, its inspired me enough to start this blog which I've been ruminating about since the day I opened.
So while most my posts will be about my clients, or the struggles of both owning your own business as well as the specific issues regarding homecare in Los Angeles, I figured a review of my day as microcosm of our companies growth over the course of a year would be a good place to start.
And with that, I've just received a text message that 2 of my caregivers scheduled for an overnight shift beginning at 11pm are both late. Time to stop the blog and get back to work.
But it seemed like something I would like to do and certainly the need existed. Besides, after 10 years working in sales and marketing in television, the prospect of both working for myself as well as working outside the entertainment industry was beyond appealing.
Over the course of the past 12+ months, I've learned an immense amount regarding caring for seniors and disabled adults as well as the sometimes bizarre world that is senior care in Los Angeles. The lack of regulation, the lack of efficacy and at times the shocking lack of judgement shown not just by homecare agencies operating under the table and relatives of patients who would just rather their mom or dad go away, but of hospital nurses, assisted living facilities, hospice companies and more.
Please don't misunderstand me. I'm not indicting the entire industry by any means. Still, if you walked the past year in my shoes and witnessed some of the things I have, your already skeptical view of the medical industry wouldn't likely decrease.
Still, today marked a day as to why this industry not only does employ many a fine person, but also gave me some indication that my company is beginning to form leaves on the branches we've so tirelessly attempted to grow.
After dropping off some brochures at Good Samaritan Hospital, I met with William Hwang, the President of Advantage Home Health. I stopped by without notice and he was kind of enough to sit down with me and discuss our services and how we could work together. Cold calling is tough and not always pleasant and sometimes the reaction you receive will do anything but warm your heart. So to have William take the time to speak with me - and with a smile to boot - set the tone for a positive day.
Afterwards, while driving to my next sales stop, I received a call from Bob King, a lawyer specializing in domestic care law out of Orange County. I had contacted Bob after reading an article he'd written in the Riverside County Bar Association journal regarding the "high price" of hiring care "off-the-books" (read illegally). He could not have been more generous with his time as we discussed the vagaries of wages for Live-In care and allowed me permission to use his article in my future presentations.
After another stop, I made my way to St. Vincent's Medical Center for a presentation to their Physical Therapists. I invited two (2) others to join me - Thomas Tilahun from Oceanside Home Health and Michele Lefever from ResponseLink. It was the first time I'd partnered with other companies on a presentation, but something I've wanted to do. I'd had success working with other neighborhood councils during my public service days as well as partnering with other companies in my television career and didn't see why more of this couldn't be done among those serving various parts of the homecare industry.
While Physical Therapists are not necessarily the first folks I look to market to at hospitals. That honor - or burden depending on how you look at it - goes to Social Workers, Case Managers and Discharge Planners. However, PT's can also be of help and I was thrilled to work with Dee Gilmore at St. Vincent's in setting this up. It was a nice group of folks who listened politely to all three of us, while devouring the pizza, soda (Pepsi, Diet Pepsi and, that's right, Sierra Mist too) and cinnamon sticks we bought for them from Pizza Hut (it was supposed to be cheese sticks, but they were out of cheese sticks, so they could give me 2 more pizza's, but I didn't need 2 more pizza's, well then what about cinnamon sticks, what's a cinnamon stick, it's like a cheese stick but with cinnamon-it will only takes us a few minutes to make them, why not put cheese on them instead of cinnamon, I make you cinnamon sticks). Thomas is a great guy and while I just met Michele and didn't want to overextend my relationship with her as I do work with another emergency response company, it seemed like we would work well together. All in all, it was a successful trip.
Finally, as I made my way back to the office, I received a call from a woman looking for a caregiver in Canoga Park. After a discussion that, if we were in a scene from Enchanted April could be described as nothing less than "delightful", we set up a meeting for this Thursday.
The highs and lows of running your own business can be extreme - and it doesn't help that I'm not always the most even-keeled person in the world despite what my outside demeanor may appear. Still today, I very much look back at it being a culmination of a year's worth of incredibly hard work and a steep learning curve. Not one thing I accomplished today could I have done a year or likely even 6 months ago. And for that, I am grateful. Plus, its inspired me enough to start this blog which I've been ruminating about since the day I opened.
So while most my posts will be about my clients, or the struggles of both owning your own business as well as the specific issues regarding homecare in Los Angeles, I figured a review of my day as microcosm of our companies growth over the course of a year would be a good place to start.
And with that, I've just received a text message that 2 of my caregivers scheduled for an overnight shift beginning at 11pm are both late. Time to stop the blog and get back to work.
Sunday, January 25, 2009
The Eternal Satellite Bill
Before I began operating Right at Home in Los Angeles, I worked in television for 10 years, primarily working with cable and satellite companies. I always found the way they ran their business and their outlook towards their customers to be "interesting."
I found this article from Ron Burley in AARP Magazine that I thought might strike a particular chord for both those who've been frustrated in dealing with their cable or satellite provider as well as for Los Angeles Laker fans.
When we inevitably step from this world to the next, we may hope to leave legacies for those we love. An obligation to pay for satellite television service is likely not among them.
* Submit a Question to Ron Burley
* Ron Burley's On Your Side
Bi-Weekly Column (AARP.org)
* Subscribe to the AARP Money Newsletter
Yet that's exactly what AARP member Jayne Sakoda and her family were saddled with following her uncle's death. His one passion was watching Los Angeles Lakers basketball, Sakoda wrote me from Cerritos, California. So in May Sakoda's husband ordered Dish Network for her uncle at his assisted-living facility, since he couldn't do it himself. Regrettably, he died less than two months later, yet Dish Network refused to cancel the contract in Sakoda's husband's name. The company wouldn't even let the Sakodas transfer the two-year subscription—worth almost $1,000—to another account.
Managing Accounts for Loved Ones
1. Establish accounts in their name—whether it's for utilities or subscriptions—but request "user" access that will let you handle the accounts.
2. Set up a filing system for account statements, passwords, PINs, and customer-service phone numbers to save you headaches later.
While the policy is rarely detailed in customer agreements, companies selling services by subscription often cancel them without penalty in the event of a customer's death. Unless Dish Network believed the whole family lived in the care facility, it seemed that the customer-service department had a lapse of common sense. Going on that assumption, I contacted Dish Network. Four days' worth of e-mails and phone messages went unanswered until I tried Robin Zimmerman in corporate communications, whose name I found on a press release on Dish Network's website. (When customer service doesn't help, dig online for a different phone number.) She cleared things up in a day, apologizing to the Sakodas, canceling the charges, and disconnecting the service.
Was it a case of temporary insensitivity or a misbegotten policy? Despite the reversal, Dish Network never offered a clear explanation
I found this article from Ron Burley in AARP Magazine that I thought might strike a particular chord for both those who've been frustrated in dealing with their cable or satellite provider as well as for Los Angeles Laker fans.
When we inevitably step from this world to the next, we may hope to leave legacies for those we love. An obligation to pay for satellite television service is likely not among them.
* Submit a Question to Ron Burley
* Ron Burley's On Your Side
Bi-Weekly Column (AARP.org)
* Subscribe to the AARP Money Newsletter
Yet that's exactly what AARP member Jayne Sakoda and her family were saddled with following her uncle's death. His one passion was watching Los Angeles Lakers basketball, Sakoda wrote me from Cerritos, California. So in May Sakoda's husband ordered Dish Network for her uncle at his assisted-living facility, since he couldn't do it himself. Regrettably, he died less than two months later, yet Dish Network refused to cancel the contract in Sakoda's husband's name. The company wouldn't even let the Sakodas transfer the two-year subscription—worth almost $1,000—to another account.
Managing Accounts for Loved Ones
1. Establish accounts in their name—whether it's for utilities or subscriptions—but request "user" access that will let you handle the accounts.
2. Set up a filing system for account statements, passwords, PINs, and customer-service phone numbers to save you headaches later.
While the policy is rarely detailed in customer agreements, companies selling services by subscription often cancel them without penalty in the event of a customer's death. Unless Dish Network believed the whole family lived in the care facility, it seemed that the customer-service department had a lapse of common sense. Going on that assumption, I contacted Dish Network. Four days' worth of e-mails and phone messages went unanswered until I tried Robin Zimmerman in corporate communications, whose name I found on a press release on Dish Network's website. (When customer service doesn't help, dig online for a different phone number.) She cleared things up in a day, apologizing to the Sakodas, canceling the charges, and disconnecting the service.
Was it a case of temporary insensitivity or a misbegotten policy? Despite the reversal, Dish Network never offered a clear explanation
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