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A home caregiver is the most effective way to ensure your aging parents are cared for without having to whisk them away to a nursing home. Most people hire a caregiver from a reputed agency to ensure the process is straightforward and smooth. However, is it possible to be a home caregiver on an independent contract basis?
A home caregiver can be an independent contractor, depending on the relationship between the caregiver and the employer. The difference between an independent contractor and an employee boils down to the degree of control and autonomy they experience at the workplace.
In this article, we’ll explore the differences between both roles, highlight how a caregiver can be an independent contractor, and determine which of the two is better from an employer’s perspective.
How Can a Caregiver Work Independently?
From the previous section, we’ve established that a caregiver can be an independent contractor if they choose to operate in a specific way. It’s important to mention that, in most cases, an employer-employee relationship is easier to manage than one with an independent contractor.
However, the route of an independent contractor is more desirable if your caregiver wants more freedom and autonomy in their role.
For a caregiver to work independently, it’s important to test certain factors and determine whether the caregiver classifies as an employee or an independent contractor. These factors include hours of operation, the nature of the relationship, and the terms of the contract.
It can be tricky to highlight the differences between an employee and an independent contractor. But you can adequately make this distinction by considering a few factors.
Hours of Operation
A caregiver’s work timings constitute a significant determinant of whether they’re employed or independent. Independent contractors are, by definition, those who operate on their own timelines. As such, most independent caregivers provide households with a schedule for when they’re available to work and what time suits them best.
The independent caregiver operates on their timeline and communicates the same to the employee. Of course, some adjustments may be required, but control over their time rests primarily in the hands of the caregiver.
This arrangement also works best when the older person in question isn’t too dependent on the caregiver. In such cases, the caregiver may settle on two or three days a week with specific times to care for their clients.
However, in cases where the patient experiences Alzheimer’s or dementia and requires constant care, the hours of operation is best determined by the employer. In such a case, though, the relationship will resemble an employer-employee setup rather than an independent contractor.
Method of Employment
How a caregiver is employed is the most obvious determinant of whether they’re independent contractors. As mentioned, independent contractors make most of the rules, which wouldn’t be the case if they were officially employed.
Caregivers hired from agencies or companies are regarded as employees and not independent contractors. In such a case, the agency takes care of most of the paperwork related to the caregiver.
The agency also files tax forms, takes care of perks, and provides the caregiver with detailed instructions on their work based on the client‘s requirements. As you can see, the caregiver has little control over such an arrangement and should be considered an employee.
However, it’s crucial to note that a caregiver may also be employed by the household. And in this case, they are considered employees even if they aren’t brought in from an outside agency.
So, we have three possible scenarios:
- An employed caregiver brought in from an outside agency.
- An independent caregiver employed by the household.
- A caregiver who retains independent-contractor status and provides services to different families.
The degree of job control will determine whether the caregiver is an independent contractor or an employee. Suppose a caregiver is given a strict work schedule, specific tasks, and timings and asked to report at certain hours. In that case, they can be considered employees and must be awarded employee privileges.
Nature of the Relationship
The caregiver’s relationship with the elderly patient and the client determines whether they are independent contractors or employees. In most cases, this distinction is subtle, and it’s hard to tell the difference.
If a caregiver is patient, friendly, and gets along with a client’s parents, the relationship seems airtight and can be regarded as an employee-employer setup. However, a caregiver may be kind and compassionate while retaining the independent contractor status.
The easiest way to distinguish is to see where and when the caregiver interacts with the client. For example, suppose a caregiver is hired for specific tasks, like taking your father to the hospital on a given day or bathing them at a set time every week. In that case, it’s possible to retain an independent contractor status.
In most cases, when the timing isn’t clearly defined, and there’s a continuous and indefinite relationship, the caregiver is considered an employee.
However, a limit on the number of visits or time spent implies that the caregiver is likely an independent contractor. Again, this is a fine line, and there isn’t much difference. The determining factor would be the degree of control exhibited by the caregiver.
A hands-on caregiver who is available most of the time and performs most tasks for the elderly patient is ideally an employee and should be granted employee status.
Additionally, independent contractors aren’t available full-time and are hired when needed.
Type of Training
If an agency or organization trains a caregiver, it’s apparent they are employed individuals rather than contractors. However, even informal training from a client could mean the caregiver is employed rather than independent.
Let’s say the caregiver must cook specific meals for their client because the client has diabetes. In this case, the caregiver may require special training to cater to the client’s requirements.
Or perhaps the client requires specific services for their parents and communicates the same to the caregiver. Some formal training may be necessary in this case as well.
While it’s not essential in determining the caregiver’s employment status, the required training can imply whether the caregiver is an independent contractor.
As a freelancer, a caregiver offers specific services that clients can choose from. Most often, an independent contractor will stay within these services. And to retain independent status, it’s essential that they only provide services they are willing to offer and nothing more.
When a caregiver agrees to additional services and training (formal or informal) to provide those services, they fall into the employee category.
Payment Specifics
When hiring a caregiver from an agency, there’s a specific fee determined by the agency providing the service. The agency decides how much they want to pay the caregiver and the client only has to deal with the agency. There’s an industry standard to follow in most cases, and most agencies stick with the general market price.
On the other hand, an independent contractor gets to decide what they will be paid for each service and how they want payments to be made. This distinction is the most important when determining whether a caregiver is employed or works independently.
Remember, though, that a caregiver may still be employed by the household. In such cases, the pay rate is determined through mutual agreement between the house owner and caregiver.
Choosing Between an Employee and an Independent Contractor
Now you know the distinction between an employed caregiver and an independent consultant. But which is the better choice?
Each has pros and cons, and you should research both options before settling on either.
At first, hiring an independent contractor seems safer. You don’t have to deal with the burden of being an employer, which comes with filing tax forms, payment slips, and several other documents.
However, a caregiver with an employee status is typically more suited to working for you long-term for several reasons.
Avoid Tax Problems
As you have seen in the previous sections, pinning a caregiver as employed or independent can be tricky. And while the line is too thin for us to distinguish, the IRS doesn’t see it that way. In fact, they have strict laws to help classify a caregiver into either of the two categories.
If you’re dealing with an independent contractor, who, by all means, should be regarded as an employee, you could get in trouble with your taxes. As an employer, you must file household employment tax, and avoiding this could lead to severe problems.
You can avoid this issue entirely by hiring a caregiver as an employee.
In some cases, people may also receive Medicaid if they don’t have the financial assets to care for their parents. And without adequately filing taxes, they may lose the right to such assistance.
Specific Tasks
Independent caregivers have greater autonomy over how they work and interact with clients. And while this may sound nice, it can be complicated when you need them to perform specific tasks for your loved one.
For example, your caregiver must prepare meals in a specific way, with certain ingredients. If it’s an independent contractor, they get to decide how the meals should be prepared, and they needn’t consult you beforehand.
This can be problematic if your elderly parents prefer food of a particular variety or a specific preparation.
Older adults tend to solidify their habits and aren’t comfortable with too many changes in routine. Having an employed caregiver will allow you to provide detailed instructions that can be followed and ensure your elderly parents get the treatment they deserve.
Clear Payments
Independent contractors have greater flexibility over their rates, which can be a blessing in specific cases. However, granting them employment status helps clarify things for both parties.
You know exactly how much they should be paid depending on the number of hours worked. And the caregiver is aware of how much they should receive at the end of their services.
This relationship ensures payments are straightforward and uncomplicated and allows for a better relationship between all parties involved.
Unemployment Insurance
A caregiver eventually develops a relationship with the elderly parents and the client whose parents are being taken care of. This relationship extends beyond the confines of an employee-employer status.
However, payments are still involved, which can complicate things when it’s time to terminate their services.
Fortunately, if a caregiver is hired as an employee, the employer must file for unemployment insurance. This type of insurance ensures that the caregiver is granted a source of funds if their services are terminated.
And if someone has been dutifully looking after your parents, it’s a great feeling to know that they’ll be taken care of even after they stop working for you.
Healthier Relationship
While hiring a caregiver can be seen as spending money on a professional service, it’s a lot more than that. This person will be a part of the household, looking after your parents, spending time with them, and perhaps even bathing and feeding them.
These elements of the job make them a part of the family over time, and it can be hard to distinguish between personal and professional.
However, by employing a caregiver as an employee rather than an independent contractor, you can keep that relationship solid and healthy to a significant degree. Due to the nature of the professional relationship, you can ensure things don’t get complicated no matter how the relationship develops over time.
Some people think that hiring a caregiver is the same as home care, but the two aren’t exactly the same. Read my comprehensive guide to learn more about their differences as well as the pros and cons of each and how to pick the service that matches your needs. Home Care Vs Caregivers: The Differences Explained
Final Thoughts
A home caregiver can be considered an independent contractor depending on the kind of relationship they develop with their clients.
However, there are three essential aspects to this role:
- The caregiver must prove that they perform activities that aren’t under the employer’s direct control.
- The caregiver must have a different base of operations.
- The worker should have a significant degree of autonomy in their work timings, pay, and services provided.
It can be hard to distinguish between the two roles, but it’s crucial to do so before going ahead with a professional arrangement of this type.
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