Whether a caregiver tends to babies, kids, elderly parents, or as sober companions or drivers, disputes frequently occur when the caregiver relationship is terminated. In many cases caregivers have been paid off the books, sometimes in cash, without
deductions for payroll taxes, and almost always without time records, paystubs and pay that complies with California law.

Especially when the separation is not cordial, the terminated caregiver may realize they were not paid consistent with California law, and then the family feels “extorted” when they ask for back pay to cover overtime, meal premiums, unpaid sick time, etc.

Some households attempt to mitigate Labor Code violation risks by hiring caregivers through a third party such as an agency that is the formal employer. Unless the agency indemnifies the household, the household most likely is liable as a joint employer, can be sued for any underpayments by the agency. Even with indemnity from the agency, if the agency is not sufficiently funded, it is unlikely to play or be able to play a major role in resolving Labor Code disputes.

We, therefore, recommend that households hiring caregivers:

• Seek assistance from employment counsel or a qualified CPA, and pay as an employer, with a W2, and with deductions for taxes (and accompanying payroll taxes).
• Keep time and pay records. Provide meals and rest breaks. Get attestations of hours worked and breaks taken.
• Consider implementing an arbitration agreement and confidentiality agreement (especially if the household involves celebrities or other high-profile individuals).

If you receive a demand from a terminated caregiver for wage and hour violations, do not ignore it. Immediately seek qualified employment counsel and consider settlement, especially if the household has not placed these recommendations in place. In the long run it will save the household money.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.