What happens if in-home care workers do not pay taxes?

Susan hesse asked...

Last year my 93 year old parents hired an agency to provide 52 hrs of care weekly to supplement my care. We chose an agency highly recommended by visiting nurses, senior center staff, etc. They told us that they were competitive in price because the people they send are independent contractors and are obligated to pay all the taxes and follow the laws for independent contractors.

In searching the IRS laws to have my dad declared chronically ill, I came across the independent contractor classification. It's seems obvious that this can't be legal. I've been working so hard to be a good medical advocate and I fault myself for not asking more. I feel that my parents have been placed in legal jeopardy, open to retroactive claims for workers' comp, etc. I also believe, however, that this national franchise agency has broken the law by misclassifiying its workers. The saddest part is that the workers are great and the clients don't know the legal problems. Tomorrow I meet with the agency head. Aside from changing agencies, how should I proceed?

Expert Answer

Merrily Orsini, MSSW, was a pioneer in the business of providing geriatric care managed in-home care. She currently serves on the board of the National Association for Home Care and Hospice and is Chair of the Private Duty Homecare Association. She holds a master's degree in social work and is a nationally known writer and speaker on aging, elder issues, and in-home care.

This is a difficult topic, paying taxes for in-home care workers, and one that full employment home care agencies fight in many ways. In Florida the state association for home care even supports this registry model. In California there is a classification for domestic referral agencies that is condoned by the state as well. The National Private Duty Association has taken a hard stand and required that its members employ their aides. But you are correct: if no one is paying/matching taxes, providing workers' compensation insurance and paying into Unemployment, then there are potential liabilities that your parents could face. However, the movement to use "independent contractors" to staff in-home care is gaining in momentum because of the expense to the business (and the client) of providing the legally required coverages. There is even national movement to expand the use of independent contractors to provide care for the disabled and aged so agencies can be bypassed because of the price difference. That price difference between hiring an independent contractor and one who is supervised, monitored, bonded, insured and legally covered should be recognized as a price of doing business correctly and providing safe care. You can ask the agency to keep the current staff and to find a way to employ them. Your cost would be more, but the agency should have the ability to do that, as I guarantee you that some of their administrative staff is employed and so they can add in your parents' caregivers to that group. Or, you can employ them yourself and use a 3rd party to assist in paying the taxes. www.breedlove-online.com is a private business that provides this service in the nanny world, but your accountant should also be able to help