A well-known public figure I met recently told me an alarming story. This woman had had questions about the tax status of the nanny she employed, so she called the agency that had placed her. A representative from the agency informed this woman that she could list her nanny's status as an independent contractor instead of as an employee. This was good news for this woman since independent contractor status meant she did not have to bother deducting taxes from her nanny's payroll; an independent contractor is responsible for paying their own taxes from their income.

There's only one problem with this advice: It's illegal. In fact doing this is not only illegal, incurring substantial financial penalties on employers who fail to comply, it has also been the ruin of many a public career in recent years. Remember Bernard Kerik and Zoe Baird? Both were up-and-coming public figures who lost high-profile political appointments, and endured the scorn of national media, for failing to pay taxes for their nannies.

Imagine if this woman's nanny had attempted to file for unemployment at any point. There would have been no records of her employment with the Workforce Commission. The authorities would have been red-flagged on this woman's inadvertent tax negligence, possibly creating an embarrassing news story that could have damaged her career.

This story reminded me of a very important, but too often inconsistent, principle in our industry: An agency's role does not end after placement. In fact, post-placement support may be the most important thing an agency does. Understandably, household employers have many questions once they have hired a nanny. These questions can range from "Do I need to offer vacation time for a part-time employee?" (The answer is no) to "Should I offer health insurance to my full-time nanny?" (The answer: You are not required to but, since health insurance is a pre-tax benefit, it is a win-win for both employer and employee). Clients rely on an agency for factual information and advice, as well they should; crucial topics relating to employment are too important to be left to a Google search. Failing that, agencies jeopardize clients in severe ways, creating circumstances that can have legal ramifications, not to mention consequences that may damage the employer/employee relationship.

As a full-service agency, we make sure every family we work with has the resources it needs for every aspect of employment. It's all part of the added value of choosing to hire a household staffing agency rather than using online services or undertaking a nanny search on your own; our clients can rest assured that they will receive a full-service advisor on all pertinent topics, including after placement. And where we know we lack expertise in a certain topic, such as in the area of taxes, it is important that they know where to refer the client for authoritative advice. This is why we defer to Breedlove, the top experts on tax questions for household employers. We feel that if we don't provide it, we'll put you in touch with someone who can. The stakes are too high to do otherwise.

Kathy Dupuy
President, MBF Agency

Labels: employer issues, employer resources, post-placement support, taxes