How To Lose Everything By “Saving Money” On Caregivers (Part 10)

caregiving part 10

A Cautionary Tale, Based On A True Story,The Conclusion To Our Story

In the story that we have told previously, Tom and Helen Conway had a live-in housekeeper named Greta, who met a labor lawyer who talked Greta into suing them for unpaid wages and other damages in excess of $1 million.  They hired a specialist labor law attorney to defend them and they learned from their attorney that they were going to be facing:

  • A court-ordered judgment for more than $1 million
  • Significant back payroll taxes, fines and penalties from the IRS and the state tax authorities for failure to file and pay householder tax returns
  • Potentially, audits of their Federal and State business and personal tax returns for at least the last three years, if not more.

How did this happen?

It happened because they privately hired Greta to be a live-in housekeeper,  nanny and caregiver, but they then acted as if Greta was member of the family, not an employee.  They didn’t keep written records of her work hours, they didn’t make things clear about when she was, and was not, on duty, and did everything based on trust and good will.

This is more convenient than doing things the correct way, but it doesn’t make it right.

No matter what they and Greta intended at the beginning, the Conways didn’t have a legal right to just ignore away their responsibilities as employers.  No matter what Greta told them in the beginning, she didn’t have the right to, in effect, give up her rights as an employee.

And once a clever lawyer found out about Greta and the Conways, by trolling the internet for new plaintiffs to represent, he was able to make Greta see dollar signs (big dollar signs, in this case) in a way that convinced her to go along with his plan to sue the Conways for a big payday for her… and her lawyer.

How can you prevent this from happening to you?

  1. Don’t hire housekeepers or caregivers on your own.
    1. Get housekeeping and caregiving help through third-party companies who certify to you that they are the employers of the workers that they send to work in your home.
    2. Pay the third-party company for the workers’ services.  Do not pay the workers directly.
    3. Consider hiring an independent advisor such as a professional geriatric care manager to review the situation from time to time and make suggestions about how to make sure that the arrangements are being carried out in a businesslike and professional manner.
  2. If you choose to disregard the advice above and hire privately anyway, then get do this:
    1. Get a good accountant or labor lawyer to help you set up the records, working conditions and payroll practices that will keep you out of trouble.
    2. Consider very carefully whether it’s really wise to have your worker live-in on your premises.  If they’re living there and on call to help, they’re probably working (and deserve to be paid for) 24 hours every day.
    3. Learn how to conduct pre-employment criminal background checks, driving record checks and drug tests.
    4. Get references for new employees and check them thoroughly.
    5. Consider asking your physician’s medical group to administer a pre-employment physical to make sure that they are fit to perform the intended work, and to administer a TB test.
    6. Add extra coverage to your homeowner’s and auto insurance policies for:
      1. Employee theft
      2. Workers compensation
      3. Employer’s liability to third parties for your employees’ actions
    7. Visit Part 1Part 2Part 3Part 4,Part 5,Part 6 & Part 7 of this tale

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About Tim Colling

Tim Colling has more than 30 years of experience in management in a variety of industries and has served in the past as a member of the statewide steering committee for the Home Care Aide Section of the California Association for Health Services At Home (“CAHSAH”). He is a Certified Public Accountant (licensed but not actively in practice), and received his Bachelor’s Degree in Accounting from California State University at San Diego. He has held the credential Care Manager Certified ("CMC") from the National Academy of Certified Care Managers, and has practiced actively as a Professional Geriatric Care Manager. Tim has worked as a CPA in Public Accounting, a corporate Chief Financial Officer for a chemical manufacturing company, and a software engineering manager for several private and public software companies, in addition to working as an eldercare manager, in-home caregiver agency administrator and professional geriatric care manager since 2003. Learn more about his in-home caregiving company at A Servant's Heart In-Home Care

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