It’s no secret that maintaining the “job” aspects of being an in-home child care provider has always been a challenge. With no formal HR department to navigate all the details and families who don’t think of themselves as an employer, providers are left to figure things out on their own.
Part of that is determining how you’re compensated for your work. The easy solution seems to just be paid in cash “under the table.” When you’re paid under the table, neither you nor your employer is reporting your income to the government. This is attractive because it’s more immediate money in your pocket that’s not going to taxes and less work for the family to do in calculating and paying the taxes.
There are a lot of risk factors with getting paid “off the books,” but there are also a lot of benefits to getting paid “on the books.”
Verifiable Income
If you apply for a car loan, student loan, mortgage, or even a credit card, you’ll need to show that you can pay monthly installments. Being paid legally provides that. If your pay is not documented, you have no way to show that you have income.
Legal Employment History
Getting paid “on the books” creates a work history. This is also important when applying for a loan, credit, or your next job.
Unemployment Benefits
Employers are required to pay an unemployment insurance tax. When paying legally, your family (employer) will do the same. If you lose your job through no fault of your own, unemployment benefits will partially replace your lost wages for up to six weeks while you look for a new job.
Social Security and Medicare Benefits
You and your employer will pay Social Security and Medicare taxes. This money is set aside to help pay for living and medical expenses when you retire. If you’re paid “under the table,” you don’t receive these benefits and may need to continue working past retirement age.
Workers Compensation
If you get hurt on the job, workers’ compensation insurance – which can only be obtained if you’re being paid legally – protects you and your family, helps pay medical bills, and replaces lost wages.
When approaching a family about why they should pay on the books, you can use our partner, GTM Payroll Services, as a resource to alleviate your responsibility. You can share the Benefits of Domestic Employment Law Compliance so your family understands how they benefit from paying legally, as well as the Benefits of Being Paid Legally so they realize why it’s important to you.
GTM Payroll Services has been working with families for decades to ease the responsibility of employing nannies and babysitters. You can refer a family to GTM and If they sign up, you’ll get a $75 Amazon gift card! Just fill out this form.
The work you do is so important, and you deserve to be fully supported and receive the same legal benefits as all other employees in the country.
