Written by: Craig Falk
The Private-Hire Model
When you hire a caregiver privately, you assume all the financial and legal responsibilities. Some people hire a caregiver who is a family friend or neighbor; others get recommendations from friends or associates in the community. Some private-hire arrangements are made from chance meetings or ads placed in local newspapers or the internet.
Once the caregiver is hired, you maintain the role of manager of the working relationship. You will need to create an ongoing system of evaluation to determine if the goals of employment are being met.
Advantages of private-hire
Caregiving by someone you know: If you're able to hire a family member, friend, or neighbor, you and your loved one may feel more comfortable. Even if the caregiver is not an acquaintance, but is a friend of someone you know and trust, the personal recommendation gives you a sense of safety and reliability.
Costs may be lower: Private-hire may appear to be the least expensive option in terms of hourly rates. (See the discussion below pertaining to the many hidden costs associated with private-hire.)
You are in control: A third advantage is that you, as the employer, have complete control of the process by managing all the details, responsibilities, and liabilities.
Disadvantages of private-hire
The private-hire model has some advantages. However, every expert in the eldercare field who we interviewed for this guide, from doctors and nurses to discharge planners and care managers, agrees that you should try to avoid hiring off the street. If you have to hire someone you don't know personally, they suggest you move cautiously. below are some of the main areas that the experts say should be addressed when hiring.
Payroll and other taxes: If you hire privately, payroll taxes, including social security, Medicare, unemployment, and disability insurance are your responsibility. Investigate all applicable tax laws and codes and create a reliable system to pay state and federal payroll taxes as well as workers' compensation. One reference is www.4nannytaxes.com, a web site that helps you to pay payroll taxes. We highly suggest that you read IRS publication 926, Household Employers Tax Guide. You will also be required to withhold pay from your employee's wages for federal and state income taxes.
Avoid under-the-table arrangements: Many private-hire arrangements are done "under the table." In other words, state and federal taxes and worker's compensation are not withheld or paid, and employee reports are not filed with government agencies. It is not prudent to hire privately for the purpose of avoiding payroll and tax obligations. While the savings may seem attractive, avoiding taxes is illegal, risky, and could prove to be more costly in the end.
According to legallynanny.com, after considering potential tax benefits, hiring household help legally and paying the correct payroll taxes costs only 4% more than paying under the table.
Management and background checks: Another disadvantage is the amount of work required to correctly hire and manage a caregiver. The legal fees and time requirements may be more than you expect. If you are privately hiring, be sure to conduct a criminal background check yourself. The average citizen, unfortunately, does not have access to some of the most helpful resources. (Department of Justice background checks are available only to approved companies.) Background checks are complicated and there are a myriad of websites offering to conduct these searches, some for remarkably low prices. beware of these sites. Do your research and make sure you understand exactly which background check you are receiving. One resource that answers many questions about background checks is http://www.nannybackgroundcheck.com/FAQ.html.
Though some people are willing to handle the details of private-hire, for many, the need for a caregiver arises at a point of crisis and the amount of work is simply too much to handle.
Legal concerns: Often with private-hire situations, legal documents are not set in place to protect either the employer or employee. The potential for economic loss from a lawsuit is great. The litigious nature of some individuals can be a real threat to an unsuspecting employer.
We highly recommend hiring a lawyer to work out the employment agreement with the caregiver. Legal counsel can oversee the process of creating an agreement that outlines expectations and job descriptions, confidentiality and severance agreements, means of dealing with wage claims, injury claims, and other legal concerns that could arise. Additionally, a lawyer could advise you on how to make sure your homeowner's insurance policy is adequate in case any injuries or accidents occur.
Substitute for absentee caregivers concerns: Another disadvantage is that you must handle all of the problems that arise. For example, when the caregiver is unable to show up for work, you need to find the replacement. Keep in mind that it will be more difficult to find replacement caregivers on holidays and weekend.
Termination Issues: One of the most heartbreaking aspects of being an employer is that of having to fire someone. After a relationship has developed, especially with a family member or close friend, most people find it difficult to terminate the caregiver. However, if the situation is unsatisfactory, you, the private-hire employer, will have to deal with it.
The Full-Service Agency Model
Full-service caregiver agencies hire caregivers to work in their clients' homes. The caregivers are employees of the company. They may work only a few hours a week or full-time.
Advantages of full-service caregiver agencies
Full-service agencies screen, hire, and help manage caregivers: The advantage of hiring a full-service caregiver agency is that the agency does the work of hiring and managing the caregiver. This should include a detailed screening of the potential caregiver. Agencies should interview caregivers to determine their suitability and ascertain the types of clients that would make the best match for them. It takes time and experience to develop the discernment to consistently hire good caregivers. An experienced agency can quickly spot a hiring mistake and correct it.
The full-service agency acts as your partner: The primary advantage to using an agency is that you bring in another party to help support the whole effort. The agency deals with any challenging situations that may arise. If the worker does not show up, or if the worker isn't doing something right, you call the agency. If you need another worker, you call the agency. If you need advice, you call the agency.
Advantages of hiring an outsider: Caregivers hired by an agency usually do not have a prior relationship with the client. This can serve as an advantage because the caregiver is able to make decisions and perform needed tasks without negative aspects of a shared past clouding his or her judgement. Family members, on the other hand, must work much harder to maintain objectivity.
Payroll and other taxes: All of the financial and legal considerations are taken care of -- bonding, state and federal taxes, workers' compensation, and liability insurance for both the caregiver and recipient should property damage or personal injury occur in the job setting.
Management and background checks: Full-service agencies have access to Department of Justice background checks as well as employment histories and references. Other screening can include DMV record searches and testing for illegal drugs and TB.
Legal Concerns: One of the biggest benefits to hiring a caregiver through a full service agency is that you have not exposed yourself or your loved one to personal liability litigation should the caregiver become injured or disabled on the job or needs to be terminated.
Disadvantages of hiring through a full service caregiver agency
unless you are up to the monumental tasks of researching the flied, interviewing candidates, and processing legal matters, and you have a family member or close friend whose schedule is flexible, and who is willing to step in and become the primary caregiver at a reduced rate of pay, there are a few, if any , disadvantages to hiring through a full-service agency.
"Caregivers who are family members relate to the person they knew before memory problems started, whereas the professional caregiver is focused on the person they just met, after the onset of problems." - Michelle Nevis, Executive Director, Del Oro Caregiver Resource Center
Domestic Referral Agencies (DRA)
A Domestic Referral Agency (DRA) provides a middle ground between full-service agency and private-hire models. The DRA will provide a caregiver who they have recruited. be sure to ask the DRA about its recruiting and screening process in the same way you would the full service agency. Look for criminal background checks (you may need to request one), work histories and reference checks. The main difference is that te caregiver is not an employee of the referring agency. Payroll taxes, workers' compensation, bonding, and liability insurance are not paid by the DRA. The caregiver may be considered an independent contractor or you may have responsibility as the employer, depending on the relationship.
In short, the DRA will provide a caregiver and will usually charge a somewhat lower rate than a full-service caregiver agency. However, if you choose this option, more legal, administrative, and financial considerations of the working partnership will be your responsibility. Because the caregiver does not work for the DRA, you must handle the management of the working relationship, including finding last minute substitutes and termination.