Letting go of a caregiver is never fun. Families often make their employee a part of the family, so when it’s time to let them go, it’s important that everything goes as smoothly as possible. Believe it or not, there are several items families need to cover when terminating their employee. This edition of The Legal Review illustrates one such case.
A client called to inform us that she needed to let her caregiver go. Her husband got a new job in another state and they only had a week to pack up and move. Obviously both parties were scrambling to make sure everything was in order and unfortunately there was a disagreement on how much the caregiver needed to be paid on her final paycheck.
The discrepancy centered on the caregiver’s vacation time. Earlier in the year, the family went on vacation for a week and paid the caregiver even though she did not work. The caregiver believed that the week of paid time off was for the employer’s vacation, not hers, so she still needed to be paid for her unused vacation.
When terminating an employee, federal law is not very restrictive. Household employers just need to make sure their caregiver receives her final paycheck by her next regularly scheduled payday. However, it gets more complicated on the state level. Some states adhere to the federal regulation, while others go as far as to mandate the family give the caregiver her final paycheck at the time of termination.
Additionally, four states (California, Connecticut, New York and Tennessee) require a written Termination Notice be given to the caregiver – and three states (North Dakota, Montana and Maine) require written notice if the caregiver requests it or it’s promised in an employment contract.
It’s also important to note that, generally speaking, anything in an employment contract must be followed unless it violates state, federal or municipal law. So for example, if a family promises to give their caregiver two weeks of severance, the severance must be included in the final paycheck.
A HomePay consultant was able to get the client to send over the employment contract they had with their caregiver. It indicated that the caregiver’s vacation would accrue throughout the year and part of it would be used in conjunction with the employer’s annual family vacation. Because the family already paid the caregiver for a week of vacation, there was no remaining unused, accrued vacation that needed to be paid out at termination. In fact, the caregiver had only accrued 3 days of vacation for the year at the time the family gave her notice of her termination, so she had actually earned more money by having 5 paid days of vacation given to her already.
We were able to calculate what the caregiver’s final paycheck would be. Additionally, to keep the client compliant with state laws, we advised her to pay the caregiver via personal check on her last day of work. We also suggested the client follow up with their caregiver at the end of the year to make sure her email or mailing address didn’t change. This way, she could ensure her caregiver receives her Form W-2 for tax filing purposes.
This case illustrates why household employment is so much more than just calculating payroll. Families are often not prepared to adequately deal with HR issues like termination. It’s an emotional time for both family and caregiver and being unsure of state and federal law can make for an ugly situation very quickly.
That’s why a specialized service like HomePay is vital. We have more than 20 years of experience in all facets of household employment, so we’re always prepared to walk families through exactly what they need to do to be compliant – while keeping their caregiver happy and their lives less stressful.