Are Your Household Employees Legal?

If you employ a housekeeper, nanny, chef, driver, personal assistant, Estate Manager, or other household staff, here's a question worth asking:

Do you know whether everyone working in your home is legally authorized to work in the United States?

Perhaps the better question is:

Do you know who verified their documents?

In professionally managed households, we spend a great deal of time thinking about staffing, payroll, schedules, job descriptions, performance, and retention. But when I conduct an Estate Operations Assessment, I sometimes discover that the most basic employment documentation was never properly established.

And it often starts innocently enough.

Meet the Martins

Let's use our fictitious family, the Martins.

Years ago, Mrs. Martin hired Clare to help clean the house a couple of days a week. Clare came highly recommended, did a wonderful job, and gradually became an increasingly important part of the household.

A couple of days became five.

Five-hour days became eight-hour days.

Eventually, Clare was working approximately 40 hours a week exclusively for the Martins.

The Martins determined her schedule, directed her work, and provided the cleaning products and equipment she used. Clare had clearly become part of the household team.

But no one had ever really stopped to professionalize the employment relationship.

Then an Estate Manager came in and began formalizing the household operations.

Job descriptions were created. Personnel files were established. Timekeeping and payroll procedures were reviewed.

And that's when the problem surfaced.

Clare could not establish that she was legally authorized to work in the United States.

Now what?

Don't Create a Workaround

This is where household employers can inadvertently make a bad situation worse.

If an employee can't be placed on payroll, the temptation may be to simply call that person an independent contractor.

Have them submit an invoice.

Issue a 1099.

Pay them another way.

But employee classification doesn't work that way.

The IRS looks at the actual working relationship. In a household, if you control not only what work is performed but how it is performed, that worker may be your household employee regardless of what you call them.

Producing an invoice doesn't magically change that relationship.

Neither does issuing a 1099.

And work authorization is a separate issue altogether.

Start With the Personnel Files

If you have household staff and aren't certain how everyone was originally onboarded, I wouldn't wait until you're changing payroll companies, terminating an employee, or dealing with another personnel issue to find out.

Conduct an employment-file audit.

For each household employee, confirm that you have the appropriate employment documentation, payroll records, job description, compensation information, emergency contact information, signed policies or agreements, and other records appropriate to your household and jurisdiction.

For work authorization specifically, employers must follow the federal Form I-9 process. Employees are allowed to choose which acceptable documents they present; employers generally cannot demand a particular document simply because they prefer it.

If something is missing or questionable, don't improvise.

That's when I recommend bringing in the appropriate payroll professional, CPA, employment attorney, or immigration attorney to determine what needs to happen next.

Then Fix the System

The bigger lesson isn't just about one employee.

It's about the household's hiring system.

Every new employee should move through a consistent onboarding process before the informal nature of working in someone's home allows important administrative steps to get overlooked.

Who collects the employment documents?

Who completes the I-9 process?

Who confirms payroll setup?

Who maintains the personnel file?

Who verifies that everything is complete before the employee begins working?

Those responsibilities should belong to someone.

Because “I thought somebody else handled it” isn't much of a household operating system.

And that brings us back to the Martins.

Clare is an employee.

She cannot establish current authorization to work in the United States.

And the Martins have just discovered it.

Does Clare get to keep her job?

We'll answer that in the next Dear Billionaire.

Kelly Fore Dixon is the founder of Estate Management Systems and host of Dear Billionaire, where she discusses the systems, staffing, and operational challenges behind professionally managed private residences.

Disclaimer: This article discusses household operations and is not legal, tax, or immigration advice. Household employers should consult qualified professionals regarding their specific circumstances.

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