Careswitch | Home Care Industry FAQs

Q: Can I pay my caregivers as 1099 contractors or do they need to be W-2 employees?

There's a simple, unequivocal answer: home care agencies are legally required to classify and pay their employees as W-2 employees, not 1099 contractors. This law has been in effect for several years and makes no exceptions.It's useful to draw the distinction between home care agencies and home care registries.An agency employs caregivers and has an admin staff that is responsible for scheduling the caregivers and coordinating with clients. A registry essentially offers access to a list of caregivers, who act autonomously to set their own schedules with clients. These are separate business models with many differences, but the easiest litmus test is whether caregivers set their own schedules with no help/direction/intervention from you, or whether you're creating their sched... Click to view the full answer from our home care industry expert.

Question 1

Should I pay my caregivers for time spent on training if I'm not legally required to?

Becki Harrington-Davis · Accepted Answer

Short answer: Yes.Here’s why:#1: You want caregivers to take training seriously.Caregiver training is not just checking a box for compliance purposes—it’s critical skill building. You want to ensure that you’re fulfilling your company&#x27;s promise to provide the highest quality care. And that means employing caregivers who are trained and qualified in the skills and knowledge to provide that care. By paying for training, you are setting the expectation that caregivers will give training their full attention and do their best work—just as you expect when they’re working in a client’s home.#2: You’re competing for employees.With steep competition from other agencies, as well as other industries such as retail and restaurants, it’s often a struggle for home care agencies to keep candidates ... Click to view the full answer from our home care industry expert.

Question 2

How can I avoid payroll-related lawsuits and make sure my home care agency is on the up-and-up?

Sabrina Sattler · Accepted Answer

There are several very important, very specific ways. Before we get to that, let’s talk briefly about why it’s important:The Department of Labor (DOL) has significantly ramped up its audits of home care agencies over the past several years.Here’s what happened: with several major legislative changes to home care in the 2010s, such as removing companion care overtime exemption and mandating that home care workers be treated as W-2 employees rather than 1099 contractors, home care become a Wild West as agencies tried to adapt to the new landscape.In 2021, the DOL became aware of this and announced a new Home Care Initiative aimed specifically at wage and payroll compliance within our industry. As of September 2022, 7% of all DOL audits in the last year have been within the home care industry... Click to view the full answer from our home care industry expert.

Question 3

Can I pay my caregivers as 1099 contractors or do they need to be W-2 employees?

Ilya Vakhutinsky · Accepted Answer

There&#x27;s a simple, unequivocal answer: home care agencies are legally required to classify and pay their employees as W-2 employees, not 1099 contractors. This law has been in effect for several years and makes no exceptions.It&#x27;s useful to draw the distinction between home care agencies and home care registries.An agency employs caregivers and has an admin staff that is responsible for scheduling the caregivers and coordinating with clients. A registry essentially offers access to a list of caregivers, who act autonomously to set their own schedules with clients. These are separate business models with many differences, but the easiest litmus test is whether caregivers set their own schedules with no help/direction/intervention from you, or whether you&#x27;re creating their sched... Click to view the full answer from our home care industry expert.

Question 4

What’s the biggest mistake home care owners make when preparing to sell an agency?

Jennifer Ramos · Accepted Answer

While a business owner may never know when a personal crisis will strike, they should always be ready to exit. The biggest mistake we see home care owners make is they begin the selling process when it’s too late to really prepare. Here are four suggestions that any business owner can start today, regardless of when they are looking to exit, whether 5, 10, or 20 years from now. You might want to take an annual day of reflection to consider the following:1. Consider Your Next ChapterTake some time to figure out the next phase of your life. For example, if you want some time to travel and relax before starting a new chapter, you may want to have a project always lined up. This can help remind you that the current business is only a chapter in your life.Here are some questions to get you star... Click to view the full answer from our home care industry expert.

Question 5

Should I apply for Employee Retention Credits and how do I know if my home care agency qualifies?

Angelo Spinola · Accepted Answer

The employee retention credit (“ERC”), enacted as part of the Coronavirus Aid, Relief and Economic Security Act, known as the CARES Act, is a fully refundable tax credit that can be as high as $26,000 per employee. Originally, the ERC was equal to 50% of up to $10,000 in wages paid to each employee before January 1, 2021. However, Congress has since extended and expanded the ERC through subsequent COVID-19 legislation.As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages paid to employees after December 31, 2020, through September 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021 for the first 3 calendar quarters. Thus, the ma... Click to view the full answer from our home care industry expert.

Question 6

When does my home care agency legally have to provide employees with healthcare benefits?

Brian Cottone Jr. · Accepted Answer

The Affordable Care Act (ACA) is a comprehensive healthcare reform law passed by the U.S. Congress in 2010 and has the primary goal of providing access to affordable healthcare to all Americans.The ACA requires all employers with more than 50 full-time employees to offer health insurance coverage to their employees or pay a penalty.A common pitfall for home care agencies, in staying compliant with ACA, is the misclassification of their employees. In home care, it’s not uncommon to have employees including:Full-time employees (work on average 30 hrs. per week or 130-hours per calendar month)Part-time employeesFull-time equivalent employees (work part-time hours that are equivalent to a full-time employee)Seasonal employeesSeasonal employees (temporary)Independent contractors (1099)(Informat... Click to view the full answer from our home care industry expert.

Question 7

What are the essential steps to starting a home care agency?

Connor Kunz · Accepted Answer

Our team created an in-depth guide to starting a home care agency covering even the minute, boring administrative stuff.Read the guide here. Click to view the full answer from our home care industry expert.

Home Care Owner FAQs