I hope everyone has caught their breath after the holidays and is enjoying the beginning of 2019!
There are three law changes going into effect this year that you need to know about if you employ a nanny. Nannies should stay on top of the latest changes to the law as well! The new laws can affect your income in several ways. If your employer isn’t aware of these changes for 2019, now is a good time to casually share this blog post with them 😉
Changes to Minimum Wage
This year, the minimum wage for the state of Washington increased to $12 per hour. If you live within the Seattle City Limits, minimum wage just increased to $15 per hour for businesses employing fewer than 500 employees nationwide. However, you would be hard-pressed to find a nanny working for even $15/hour in Seattle based on our recent pay rate surveys!
According to the Office of Labor Standards, “employers can meet this requirement by offering no less than $12.00 per hour in wages and contributing at least $3.00 per hour toward an employee’s medical benefits and/or reported tips.”
This is has some interesting implications for nanny share situations. Some people believe nanny shares meet the minimum wage requirement because the two families are teaming up to offer a wage that’s higher than the minimum wage. Others believe that each family needs to meet the minimum wage requirement.* (But hey, there is also some debate as to whether nanny shares are even legal in our state, sooo….)
*My official stance on this is Switzerland, but I am in the process of discussing this with a lawyer and hope to have another post on the topic soon.
If you really wanted to cover all of your bases with minimum wage laws in a Seattle nanny share, each family could offer $12/hour and $3/hour in medical benefits to your nanny.** According to our nanny share rate survey, most nanny share families are paying somewhere in the $12-$15/hour range.
There area a couple of cool things about offering some health benefits to your nanny:
- Somewhere in the world, unicorns and kittens will be dancing together in rainbow-filled meadows 🙂
- Your nanny will be eternally grateful he or she has such an awesome, caring employer
- Offering medical benefits is a GREAT way to pay your nanny more while not increasing your tax burden
You can take top-employer honors by doing something really great and setting up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). This allows employers to offer tax-free health benefits to household employees, according to this article.
**If your head is spinning trying to figure out payroll for a nanny share, our partner payroll company Growing Numbers can help! They are one of the most affordable options I have ever seen and owned by three fabulous Washingtonian women!
2019 Mileage Reimbursement Update
New year, new mileage reimbursement rate! This year the Internal Revenue Service has set the rate at $0.58/mile. This is money a nanny can put toward the cost of operating and maintaining their vehicle that is used on the job. MileIQ is a helpful app for tracking mileage that you might want to check out.
The money a nanny receives as mileage reimbursement is not taxable UNLESS the employer chooses to pay something more than that rate. Anything over $0.58/mile is considered taxable income.
Mileage reimbursement is not required by law, so long as their expenses for driving their own car do not bring wages below minimum wage. However it’s generally recommended, is considered to be a nanny industry standard and is a nice human being thing to do!
Washington Paid Family Leave Act
This is the big one for 2019. (And, can I just say, NICE WORK GETTING THIS PUT TOGETHER, WASHINGTON!)
The Paid Family Leave Act mandates employee and employer* contributions to fund the benefit program, which according to Washington state, “will allow workers to take up to 12 weeks, as needed, when they welcome a new child into their family, are struck by a serious illness or injury, need to take care of an ill or ailing relative and for certain military connected events.”
*The premium for employers with fewer than 50 employees is optional, but paying the employee portion gives you access to some state grant assistance for hiring a replacement worker when an employee uses Paid Family and Medical Leave.
More details about this important new law here, as compiled by Becki Brack from Growing Numbers nanny payroll service:
Almost all Washington employers will be required to withhold a new tax from their employees’ paychecks, and this includes household employers.
Key Details of the Washington Paid Family Leave Program
- The total premium for 2019 is 0.4% of an employee’s gross wages.
- Employers with fewer than 50 employees are not required to pay the EMPLOYER portion of the premium.
- The EMPLOYEE premium is 63% of the total premium (or 0.252% of gross wages) and should be withheld from employees’ paychecks beginning January 1, 2019.
- An employer can elect to pay all or some of their employees’ share of the premium on their behalf.
- The other 37% of the total premium is the employer portion, but again, businesses with fewer than 50 employees are not required to pay this employer portion.
Additional information can be found here. Important information for employers can be found on the “Employers” tab of that website.
How much does it cost my nanny (or myself, if I choose to pay the employee premium on behalf of my nanny)?
For every $100 in gross wages paid to your nanny, the employee premium for the program is approximately $0.25.
Example: If you pay your nanny $20 per hour for 40 hours per week of child care, all 52 weeks of the year, gross wages for the year are $41,600. The employee portion of the tax will be approximately $105 for the entire year.
Click here to check out a handy premium calculator the Washington Employment Department has created, so you can do your own estimating of the tax, including seeing how much the optional employer portion would be.
What are my responsibilities as a household employer?
Employers will be responsible for:
- Reporting employee wages, hours worked, and other information for all household employees beginning April 2019.
- Collecting and remitting premiums.
- Posting a mandatory poster to notify employees of the program prior to January 2020.
IMPORTANT: If you fail to start collecting the premium from your employees, you cannot go back and collect it in arrears per the law. Instead, you (the employer) will become responsible for paying the premium yourself.
Regarding reporting starting in April 2019, what information do I need?
You will need the following information on hand to file the quarterly reports, the first of which is due in April 2019 and you need to start tracking wages and hours beginning January 1, 2019:
- Your UBI number (WA state business ID number)
- Business name (usually just your name)
- Total premiums collected from employees
- Name of the person that prepared the report
For each employee, you will need:
- SSN or ITIN
- Full name (first and last name plus middle initial)
- Hours worked in the reporting quarter
- Wages paid in the reporting quarter
For Growing Numbers’ nanny payroll clients, Growing Numbers does all the tracking, reporting and remittance of this tax (and others). The employer may, optionally, pay the employees’ premium themselves or a portion of the premiums, and Growing Numbers can handle those calculations, collections, and tracking.
Where do I go to manage my account related to this program?
Secure Access Washington is a central login that allows you access to the online services of multiple state agencies. It’s often referred to as SAW. You will need a SAW account (very easy to sign up), and then add a service to your SAW account called Employer Account Management Service (EAMS) which is provided by the Employment Security Department.
The official WA Paid Family Leave Program website points out that the report type for this program is not yet available until closer to April 2019, and the EAMS service is being optimized to make the process easy for employers. All that to the point that the EAMS online service may change between now and April 2019, the first reporting month for the program.
Should employers cover the employee premium for their nanny/nannies?
It is entirely optional for the employer to cover any portion of the employee premium (0.252% of gross wages) that is due under the WA Paid Family Leave Program. Since this is a new program that starts on January 1, 2019, there is no data available yet to determine what percentage of employers are deciding to cover a portion or all of the employee premium. The decision is up to each individual family and the nanny.
For more information, contact Becki Brack at Growing Numbers Accounting and Bookkeping by clicking here.
If you use our Nanny Parent Connection Pay Calculator, we have updated everything so that you can now calculate the correct Paid Family and Medical Leave premium to withhold!
It can be tricky staying up to date with all of the law changes happening. Hopefully this helps to bring you up to speed for 2019!
Happy New Year!