Nannies

Don't know if anyone has any experience with this matter, but I sure as heck don't, so I thought I'd toss it out there.

The owner of the company wants to hire a nanny for his little girl - she would be full time, 40 hrs a week (or more). He has asked me if there are any legal impediments to running the position through the company's payroll. I told him that I honestly didn't know.

I called our work comp insurer and they told me we do have the domestics WC class available to us, so workers' comp is not a problem.

Anyone give me any good reasons, either pro or con, to run this person through our company payroll? The owner doesn't have any problem with providing her benefits in accordance with our policies.

Any input would be appreciated.

Comments

  • 17 Comments sorted by Votes Date Added
  • He wants to hire a Nanny for his personal life and pay her through the company?

    That just doesn't sit well with me...


  • Me, neither. That's why I put this out there.

    However, so far, I haven't been able to find any reason why we can't, so long as we treat her as an employee, subject to our policies and procedures, observe FLSA guidelines, etc.
  • If he's the sole owner of the company and will abide by all laws and policies governing employees I don't see why it can't be done. Why does it bother you? She's an employee like you who's assignment is to watch the owner's kid. What's the big deal?
  • I don't know about your state, but here the nanny would need to be a licensed day care provider. Then the facility where the day care would take place must be inspected, even if it's the home of the business owner.

    Why doesn't he just give himself a $10K raise and pay for the daycare himself? It's tax-decuctible. You could introduce him to Flexible Spending Accounts. Handle it any other way but posting an expense to the Nannie account.

  • PARABEAGLE: My friend, there is nothing but personal gain by the boss, when he wants to run his household employees through the company. It can be done, however, every expense associated with the employment of this person will in the end have to be charged back to the owner's personal income.

    I have been there and done that! Our company cafeteria included a cook, who did not cook or prepare a sindle food item for the companies' work force, she did cook some of the finest meals for the executive dining room. It took her 40 hours a week to serve one lunch meal a day, guess where she was for the rest of the day, yep, in the home of the owner keeping house for the owner's family. Our company "goofer" driver was also the personal driver of the owner, our yard man was the personal yard man of the family. One day a week he worked the company lawn, the rest of the week he worked the yard/garden/ or food plots with the finest equipment money could buy.

    When the owner's sold, guess what? Some how the IRS found out about all of this forced labor and services and the company had to go through and sort out the value paid by the company on his behalf and wham he got hit with a huge bill for income not paid for several years.

    Yes, it can be done but make sure you tell him that every red penny must be charged back to him as personal income. That might be the end of your employment as the HR, but it must be done. Our personnel manager had good sense ($ents) and was able to produce an old memo that he had written to the owner with this notice and his hand written notice to do it any way. The memo was old, but it helped the company from being involved with the scheme.

    Don't do it if you can not charge back to the owner.

    PORK
  • I have to agree with what Pork said. This "nanny" position is not going to serve any purpose for the business. If he still insisted on doing it, I would send a CYA memo to him, outlining your concerns and the potential harm that could come to him. (Keep this memo at home in case you need it later).

    Another issue - whenever you are dealing with children, you best be diligent on the hiring, licensing, background checking, etc. If this person turned out to be a pedophile, who is going to be responsible? (The company).

    Our practice looked at the possibility of having an onsite daycare center, but the startup cost was enormous - not to mention the potential liability.
  • Pork's response made me think. Not being the tax whiz our CFO is, I think I will run this scenario past him (and our labor lawyer) before I tell the owner yes/no.

    As far as background checks go, the nanny has already been selected. He interviewed several through a nanny matching service and they apparently vet every candidate they represent. However, we will be conducting our own checks, using our own vendors, once this person starts.

    Wish we could payroll her through the nanny service, but they're matchmakers only - not in the business of employee staffing.

  • I see nothing but danger signals and red flags in this 'gracious offer from the boss'. Who is going to reimburse the company payroll? Who is going to handle the FICA? (Guess) whose account will be charged by UI when she gets laid off? Guess whose federal tax ID number she shows up on as being employed by? Guess whose social security account is charged and credited by the IRS when they collect each payday and which account she shows up on when she retires in a few years. Guess whose AAP and a multitude of other government reports she shows up on. Guess which employer is negatively affected should she be treated more fairly or more unfairly when an agency birddog requires you to run numbers and reveal stats.

    It would have been easier to ask HIM to tell ME one good reason FOR doing it.

    Tell me this ain't the same genius who suggested you look into providing frozen, nuclear meals for the hotel guests.
  • UPDATE: Thanks, everyone, for your valuable input. I also ran this past our labor lawyer who, as luck would have it, actually has a nanny, also. She VEHEMENTLY opposes running the nanny through our co. payroll for a multitude of good reasons, a few of which were mentioned by Pork, Don, etc.

    Bottom line is, I have asked the owner to hire the nanny personally and have arranged to run payroll through a "nanny-ADP-type service". The only thing the owner has to do is tell his assistant how many hours she worked that week and this nanny-pay thingie does the rest, including issuing the check, handling payroll deductions, etc.

    And, no, Don. This ain't the same guy who recommended the horrid nuke-'em meals. That was just the DO. The guy needing the nanny actually owns the company.

    Thanks again, everybody! x:-)
  • Really interesting thread. I hadn't thought of the tax problems, 'course it was all I could do to file mine on time. Man, it seems like every day in this field there's a new problem to solve. I swear, HR is the best job in the world.
  • TO ALL: Ain't is "gosh darn" great that we HR folks get to deal in such interesting activities. I am so glad, that I am a subscriber to this forum. Anyone out there reading in on our dialogue on this thread should realize that this one posting has much value to any company. Get your subscription in and join the group. Thanks to all, this is the best thread ever posted. we got a lot of facts and some raised eye brows, and of course a little humor. I wonder what the other PROFESSIONALS have to help them get through their day; I'm addicted and admit it.

    May we all have another Blessed day tomorrow!!!

    PORK
  • Alright pOrK, simmer down, it was good but not that great.
  • Sorry guys. I just caught-up on the thread from home. I had "one of those days" and admit that I was being a party pooper when I posted.

    Too bad pOrK doesn't get this excited about posts which focus on factual IRCA and FLSA subjects.

    Good information.

    Gene
  • This one has been fairly well flogged. The only thing I can add is personal experience with a similar situation.

    Sole owner ran both his limo-driver and maid through the company payroll. All associated charges were captured in a single owner receivable account. At the end of the year, the tax guys would basically "charge" this to the owner as taxable income.

    While he did owe the IRS lots of $ he never paid, at least he did not get nailed for not reporting the income.
  • Another issue he probably doesn't want to deal with is the tax ID no., I=9 (if applicable) and tax filings. If he pays through his income, he has to file Social Security and possibly income taxes for his employment. He also has to give her tax form at end of year. I am sure he is trying not to have to do all this. If company does it for employees, he thinks why not for me.
    I don't like the feeling that running personal employees through company, but sometimes you can't stop it. (It worries me about ethics of folks that do this, even if they mean well.) I wouldn't want the liability on the books. Is he going to say his child is an employee?
    E Wart
  • You nailed it with one word! ETHICS. Period.
Sign In or Register to comment.