Updated: Nov 11, 2020
More than anything else at this moment, I'm feeling burdened by uncertainty. It's amazing how much we rely on routine in our home, and while we have adjusted surprisingly well to this new lack of schedule, it's the not knowing when things will return to normal (what even is normal after this?) that is challenging me right now.
Adding to the general unsettled feeling is the deluge of information about infection rates, curve flattening, unemployment claims, and shifting timelines. It's hard to get a handle on paths forward when information keeps changing before we have a chance to digest it.
For parents that employ a nanny or other household workers, you have the added responsibility of trying to provide clarity for a person that may solely rely on you for their livelihood. It's a giant responsibility and, while there are programs to help both you and your employees weather this storm, the information out there is confusing. That's why I thought I would try to pull together some of the most asked questions relating to nannies and household employers in light of the COVID-19 pandemic.
Is my nanny considered essential?
Essential workers are defined by your state and sometimes by local governments. Some typical examples include employees in industries like healthcare or public safety.
Whether or not your nanny can still come to work is also governed by your state. They may be considered essential workers, or they could only be deemed essential if they are caring for children of essential workers.
I'm concerned about paying my nanny's salary during this crisis - what are my options?
You have a few, which we'll discuss in detail below. You can consider:
Paid sick leave through state or local policies
Paid leave through the Families First Coronavirus Response Act (FFCRA)
Letting your nanny go (with some exceptions)
Read on for a detailed look at each of these options.
Can my nanny file for unemployment?
Your nanny can file a claim for any week they are not working and are not paid or during a week that they are working reduced hours. They will need to reduce the weekly claim by any wages received for their work during that week.
While each state administers their own separate unemployment insurance program, many states have relaxed their eligibility rules and may allow expanded COVID-expanded unemployment claims. Your nanny can file for unemployment through your state's labor agency.
This is important: If your nanny has been paid off the books, they will likely not be eligible for unemployment benefits. This is because unemployment benefits are paid out based on wage history. If there is no legal record of your nanny earning wages, the claim will be denied. Additionally, if your nanny has not been paid legally and tries to file an unemployment claim, this could trigger a phone call to you from your state's employment agency.
If you need to get caught up on your nanny taxes for the year, now is a great time to get started. Our service allows you to enter wages already paid and we'll calculate the taxes owed so you can file them and move on. Many state labor agencies are relaxing deadlines and reducing late penalties for taxpayers due to the coronavirus crisis, so there has never been a better time to get caught up.
What is the Families First Coronavirus Response Act (FFCRA)?
The FFCRA is federal legislation that addresses the COVID-19 pandemic and took effect on April 1. This law provides employees – including nannies – with paid sick and family leave beginning April 1 for specific circumstances related to COVID-19.
The Family and Medical Leave Act (FMLA), which typically doesn’t apply to small employers, is now in effect for employers with fewer than 500 workers.
Employees can take paid sick leave if they are:
Quarantined or isolated subject to federal, state, or local quarantine/isolation order
Advised by a health care provider to self-quarantine (due to COVID-19 concerns)
Experiencing symptoms of COVID-19 and seeking a medical diagnosis
Caring for a quarantined individual
Caring for a child whose school or place of care is closed due to COVID-19
Experiencing any other substantially similar condition
They can take expanded paid family leave if unable to work due to care of a child under the age of 18 because of a school or childcare facility closure due to the public health emergency.
Does my nanny qualify for benefits under the FFCRA?
Nannies are eligible for paid sick leave. If they have worked for you for 30 days, they may also take extended paid family leave.
They are eligible for:
80 hours of paid sick leave
12 weeks of paid family leave under the FMLA expansion (two weeks unpaid; 10 weeks paid)
Paid leave benefits run from April 1 – December 31, 2020. Employees can’t collect unemployment if they are receiving paid leave benefits under the FFCRA. You will be responsible for paying for the leave, but you’ll be fully reimbursed for paid sick and family leave through payroll tax credits (see below for more details).
What are the benefits under the FFCRA?
If nannies need to take paid sick leave to care for themselves, they'll be paid their regular rate of pay at a maximum of $511/day (or a total of $5,110 over 10 days).
If they take paid sick leave to care for a quarantined or ill individual, they can be paid at 2/3rds of their regular rate of pay at a maximum of $200/day (or $2,000 total over 10 days).
For the paid family leave under the expansion of FMLA, they can be paid at 2/3rds of their regular rate of pay at a maximum of $200/day (or $12,000 total over 12 weeks).
How do I get the tax credits under FFCRA?
Paid leave is refunded to you through a dollar-for-dollar tax credit. Whatever you pay your nanny for paid sick or family leave, you can reduce from your employer taxes. This applies to qualifying leave provided between April 1 and December 31, 2020.
Typically, you send taxes every quarter to the IRS (your employer portion and anything you withheld on behalf of your nanny). If you provided paid leave on or after April 1, you can hold onto the taxes that you would typically pay to the IRS after the second quarter (due July 15th) to cover the paid leave. If your total payroll tax amount is not enough to cover the cost of paid leave, you can seek an expedited advance from the IRS.
How do the FFCRA leave benefits impact my nanny's sick balance?
The benefits provided under FFCRA are in addition to the paid leave your employee already is entitled to under any type of nanny contract. Your employee could take two weeks of paid leave under FFCRA and, if they still need time, they can use the sick time or other PTO provided under your work agreement.
Also, your employee could be eligible for paid sick leave under state law. FFCRA benefits would be in addition to any state-mandated paid sick leave.
Do I have to pay nanny taxes during this time?
If your nanny is working as usual, you will continue to handle taxes the exact same way you do every quarter.
If your nanny is on paid sick/family leave, you’ll continue to withhold FICA taxes from your nanny’s pay (and federal income taxes if that's what you've agreed to) and set aside your contributions to FICA and unemployment, just like normal. However, instead of paying those taxes to the IRS, you’ll hang onto those funds to cover what you paid your nanny for qualified leave under FFCRA.