An army of our nation’s caregivers — nannies, babysitters, senior aides — are out of work due to stay-at-home orders, illness, or caring for their own kids and family members impacted by the COVID-19 crisis. At the same time, furloughs and layoffs are putting families under incredible financial strain. Many are struggling to continue paying their caregivers — to both assist them financially and retain them once social distancing orders are eased. America’s caregiving crisis is accelerating. Eva MacCleery, director of client services for Care.com HomePay, is with us to explain how two new pieces of federal legislation — the Families First Coronavirus Response Act and the CARES Act — can grant relief to families and their caregivers during this difficult time. Eva answers questions on new expanded provisions for paid sick and family leave benefits, payroll tax credits, unemployment insurance, and more.
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For more information, visit https://www.care.com/homepay.
New COVID-19 Legislation: What families and caregivers need to know
Intro: Welcome to the Equal Parts podcast brought to you by Care@Work.
Emily Paisner: Being a working parent is hard. Right now, families have a lot of questions about how they and their caregivers can manage financially during this challenging time. We invited Eva MacCleery, director of client services for Care.com's HomePay, onto the podcast to address these questions. Eva went over key provisions of the Families First Act and the CARES Act, two new laws that directly affect millions of American families and caregivers.
She answered questions about paid sick leave, paid family leave, unemployment, payroll tax credits, and more. If you employ a full or part-time nanny, a babysitter or a family caregiver, this episode is for you. Have a listen. Eva, thank you so much for joining me today and helping us to understand how the new federal coronavirus laws are impacting both families and caregivers.
Eva MacCleery: Thank you for having me.
Emily: I wanted to start by setting a quick baseline of what it means to be a household employer under tax laws. Can you explain that for our listeners and also explain who qualifies as a household employee?
Eva: Sure. According to the IRS's Publication 926, a household employer is someone who employs an individual to work in or around their home. Examples of household employees are nannies, senior caregivers, and housekeepers, but only if the individual crosses the $2,200 per calendar year threshold. You do have to register yourself as a business to get federal and state tax account identification numbers and you withhold taxes from your employees' pay, you provide your employee with pay stubs every pay period, and file quarterly tax returns.
Emily: Because of the coronavirus, right now, there are a lot of caregivers who are unable to work. There are two pieces of legislation that recently went into effect that can help both families and caregivers that are impacted by COVID-19. The first is the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. Maybe we can start first with the CARES Act and you can give us a high-level overview of some of the biggest benefits that both families and caregivers need to be aware of right now under this new law.
Eva: There are two components of the CARES Act that impact families and caregivers. The first being, the stimulus checks. Caregivers who have been paid legally and who have filed a personal income tax return in 2018 or 2019 and who have a Social Security number. If they earned less than $99,000 in adjusted gross income, they will receive a $1,200 stimulus check. It's up to $1,200 depending on your income. It could even be a $2,400 stimulus check for married couples, plus an additional $500 for each child. These stimulus checks are going out by direct deposit.
If that's how you received your refund when you filed your personal income tax return, then that's how you'll receive the stimulus check is by direct deposit. Otherwise, it will be a check in the mail. The other part of the CARES Act that is great for household employers and household employees is the extended unemployment insurance benefits. If a caregiver is laid off due to no fault of their own such as due to COVID-19, then they qualify for unemployment insurance benefits from the state. Thanks to the CARES Act, those benefits have been extended deeply. We're now able to receive an additional $600 per week in unemployment insurance and the benefits are extended by an additional 13 weeks.
Emily: Wow. I just want to point out something that I think is really important for our listeners to understand, and that is if you pay your caregiver under the table, they will not qualify for any of these benefits. This is accurate?
Eva: That is true. If you have not paid your caregiver legally in the past, it's not too late to get caught up. What you want to do is file the past tax returns as soon as possible. Get your caregiver a W-2 as soon as possible. As soon as your employee receives their W-2, they can go and file the personal income tax return, which will then trigger then to receive their stimulus check. Once you file any quarterly unemployment insurance returns, then when your employee files an unemployment insurance claim, they will be eligible for unemployment benefits.
Emily: The situation really does highlight the importance of paying your caregivers legally, right?
Eva: It does. Caregivers tend to live paycheck to paycheck and they really need these benefits right now.
Emily: Okay. Now, let's talk about the Families First Coronavirus Response Act. There are several provisions in this new law that help families and caregivers as well. Can you go through the most important ones from this act briefly?
Eva: The Families First Act calls for paid sick leave and paid family leave that caregivers are now eligible for. Families can be reimbursed dollar for dollar for providing these benefits to their employees. There will be refundable tax credits to reimburse employers for these benefits that they pay out.
Emily: Under what circumstances would it be appropriate for a nanny or a family caregiver to use their paid sick leave or family leave benefits under this new law?
Eva: There are very specific guidelines for using these benefits. If the caregiver is ordered to quarantine or isolate, that would qualify. If the caregiver is experiencing COVID-19 symptoms and is seeking a medical diagnosis, that would qualify. Also, if the caregiver is caring for an individual such as a family member that is ordered to quarantine or isolate, that would qualify. Lastly, if the caregiver is caring for their own child whose school or daycare has closed, they would qualify for this leave.
Emily: How much paid sick time and expanded paid family leave do they get under this act?
Eva: For the sick time, your caregiver is eligible for 80 hours. That's assuming they're full-time. For a part-time caregiver, it would be the average weekly hours they typically work in a two-week period. For the family leave, it's 12 weeks. The first two weeks can be unpaid, but the remaining 10 weeks of the 12 weeks are paid at two-thirds the employee's regular hourly rate.
Emily: What if you already offer your caregiver paid sick or family leave benefits as part of their employment contract with you? Are these new paid benefits available to them in addition to that?
Eva: Yes. If you offer your household employee benefits already, these COVID benefits are on top of that. If your caregiver needs to take leave for any of the reasons that we just walked through, then these COVID-19 benefits would kick in first. Now, we just talked about how the first two weeks of the emergency FMLA could be unpaid. Well, if your caregiver has accrued two weeks of paid vacation that they haven't used yet, then you could pay out the two weeks of vacation. They aren't going the first two weeks of emergency FMLA unpaid.
Emily: This crisis has left so many caregivers out of work and so many families are struggling financially. Many people are losing jobs and may be unable to keep paying their caregiver. It's so hard for everyone involved. What is the responsibility of the household employer in terms of paying their caregiver right now? Do they legally have to keep paying them?
Eva: If your caregiver is no longer working for you, you are not required to pay them unless your contract says otherwise. Many families are trying to still pay their caregiver if they can afford to. If they can't afford to fully, then they're doing any nice gesture they can afford like sending groceries to their caregiver during this time. If the family completely stops paying the caregiver, then they should qualify for unemployment insurance benefits to help them until they're able to return for work. The important thing to do is to stay in touch with your caregiver. Once this is all over, your caregiver can return to work as soon as possible.
Emily: What about daycare centers and preschools? Should parents keep paying them too even though most of them are closed?
Eva: Generally, yes. If you want the daycare to hold your child's spot for once this passes, then you will have to keep paying the daycare. Check your contract though. They might be able to offer you a discount for now.
Emily: I've also heard a lot about loans that small businesses can apply for to get through this like loans under the Paycheck Protection Program, which is part of the CARES Act, or the Economic Injury Disaster Loan. Can household employers apply for a PPP loan to keep their nanny or family caregiver on the payroll right now?
Eva: Congress appropriated almost $350 billion for small business relief, but the PPP loan is definitely not available to household employers. The guidelines are very black and white on that. The guidelines are not as black and white on the EIDL loan. Household employers may or may not qualify for that. However, the funding for these loans is drying up quickly and Congress is currently in discussions to possibly extend that funding.
Emily: That's helpful. I'm sure some people are wondering that right now. Finally, there's a lot of information that we just talked about and it can definitely be confusing for some. Where can people go to learn more information on how to help figure this out and how to help manage their employees during this crisis?
Eva: The IRS has a publication called Publication 926 that you can check out. The publication provides guidance to household employers on how to pay their household employee legally, but that publication has no information about the CARES Act or the Families First Act or shelter in place or stay-at-home orders. If you need more comprehensive help, then I recommend going to our website Care.com HomePay's website. We specialize in household employment, payroll, and taxes. We post up-to-date information and links to resources on our website almost every single day.
Emily: Eva, thank you so much for joining us today and clarifying some of this information for both household employers and the caregivers that they work with. Thank you so much.
Eva: I'm happy to help.
Outro: Thanks for listening to this episode of Equal Parts. See you next time.
Emily: Wait. Before you go, I just want to tell you a little bit about Care@Work by Care.com. They work with some of the world's largest companies to offer family care benefits to their employees. If you're one of the lucky ones who already has care benefits at work, use them. If you don't, ask for them. It's a real lifesaver. To learn more, visit care.com/careatwork. Again, that's care.com/careatwork.