If you're considering in-home care for a loved one, understanding Texas employment law isn't just about following rules. It's about protecting your family, ensuring your caregiver is treated fairly, and avoiding costly mistakes that could derail your care plans. The good news? With the right guidance and support, managing payroll and compliance doesn't have to be overwhelming.

Understanding Your Responsibilities as an Employer

The moment you hire someone to care for your loved one in your home, you become an employer with real legal obligations. This isn't just a casual arrangement between neighbors. Texas and federal law treat in-home caregivers as employees, which means you're responsible for proper wages, taxes, and compliance with employment regulations.

Many families are surprised to learn about these responsibilities, but they exist to protect both you and your caregiver. When everyone follows the rules, caregivers receive fair compensation and legal protections, while families avoid penalties and create sustainable, professional care arrangements.

Wondering about the differences between hiring directly and hiring an agency? Head to our blog.

Texas Wage and Hour Requirements: What You Need to Know

Minimum Wage Standards

Texas follows the federal minimum wage rate of $7.25 per hour, and this applies to in-home caregivers just like any other employee. While some Texas cities have established higher minimum wages for certain municipal contracts, these typically don't apply to private home care arrangements. However, paying above minimum wage is always an option and often helps attract and retain quality professional caregivers.

Payroll Taxes: Your Share of the Responsibility

When you pay your caregiver, you're responsible for withholding and paying several types of taxes:

Federal Income Tax: You must withhold federal income taxes from your caregiver's wages based on their W-4 form.

FICA Taxes: This includes Social Security tax at 6.2% for both you and your employee, and Medicare tax at 1.45% for both parties, totaling 15.3% combined. You'll withhold the employee's portion from their paycheck and contribute your matching share.

State Unemployment Insurance: Texas requires employers to pay state unemployment taxes, though there's no state income tax to withhold from employee wages. New household employers (including those hiring caregivers) pay 2.7% on the first $9,000 of wages per employee annually.

Pay Schedule and Documentation Requirements

Texas law requires that nonexempt employees (which includes most caregivers) receive payment at least twice monthly. More importantly, you must provide clear pay statements showing:

• Employee name and pay period

• Hours worked and pay rate

• Gross earnings and all deductions

• Net pay amount

These requirements aren't just bureaucratic paperwork. They protect both you and your caregiver by creating clear records of wages and tax payments.

Overtime Considerations

If your caregiver works more than 40 hours in a week, federal law requires overtime pay at 1.5 times their regular rate. This is particularly important for live-in caregivers or those working extended shifts. Planning for potential overtime costs should be part of your care budget from the beginning.

Employee Classification: Getting It Right

One of the most critical decisions you'll make is properly classifying your caregiver as an employee rather than an independent contractor. Texas uses multiple factors to determine worker classification, and misclassification can result in significant penalties and back tax obligations.

In-home caregivers are always employees because:

• You control when and how they work

• You provide direction about care tasks

• The work is performed in your home

• The care is ongoing rather than project-based

While it might seem simpler to treat a caregiver as a contractor, this approach creates serious legal and financial risks for your family.

Upcoming Changes in Texas Employment Law

Healthcare Worker Noncompete Restrictions

As of September 1, 2025, Texas Senate Bill 1318 will significantly restrict noncompete agreements for healthcare workers, including limitations to one year duration and five-mile geographic radius. While this primarily affects healthcare agencies and businesses, families hiring directly should ensure any employment agreements don't include overly restrictive terms.

At-Will Employment Protections

Texas remains an at-will employment state, meaning either you or your caregiver can end the employment relationship at any time, with or without cause, unless specified otherwise in a contract. This flexibility can be valuable in home care situations where family needs or caregiver availability may change.

Compliance Deadlines and Record-Keeping

Quarterly Reporting Requirements

Employers in Texas must file quarterly wage reports and pay unemployment insurance taxes to the Texas Workforce Commission. Missing these deadlines can result in penalties starting at 5% for payments up to 30 days late, increasing to 10% for longer delays.

Essential Records to Maintain

Proper record-keeping protects your family and ensures compliance:

• Employment agreements and job descriptions

• Time sheets and pay records

• Tax withholding and payment documentation

• I-9 employment eligibility verification forms

• Workers' compensation information (if required)

Handling Employment Issues

If wage disputes arise, Texas law requires claims to be filed within 180 days of the wage due date. The Texas Workforce Commission investigates these claims and can impose penalties for bad faith actions. Clear documentation and proper payment practices are your best protection.

The Hidden Costs of Going It Alone

While hiring a caregiver directly might seem like the most cost-effective approach, many families underestimate the complexity and hidden costs:

Time Investment: Setting up payroll, calculating taxes, filing quarterly reports, and maintaining compliance takes significant time away from caring for your loved one.

Penalty Risk: Mistakes in classification, tax calculation, or filing deadlines can result in substantial penalties that far exceed any savings from self-management.

Administrative Burden: From creating employment agreements to handling tax forms, the paperwork requirements can be overwhelming for families already managing complex care needs.

Limited Resources: Without expertise in employment law, families may miss important changes in regulations or requirements.

Why Professional Support Makes Sense

Working with a service like Clara eliminates the guesswork from employment compliance. Professional care facilitators handle everything from initial caregiver screening and hiring to ongoing payroll management and tax compliance.

Technology That Simplifies

Modern payroll platforms provide direct deposit, automated tax calculations, and digital record-keeping that meets all state and federal requirements. These systems generate the W-2s, quarterly reports, and documentation you need without manual calculation or paperwork.

Peace of Mind Protection

Professional management means experts are watching for regulatory changes, handling compliance requirements, and ensuring your caregiver receives proper pay and benefits. This protection allows families to focus on what matters most: their loved one's care and wellbeing.

Scalable Solutions

As care needs change, professional support adapts seamlessly. Whether you need coverage for a few hours weekly or around-the-clock care, the employment management remains consistent and compliant.

Special Considerations for Senior Care

Insurance and Liability

Beyond payroll compliance, employing a caregiver raises insurance questions. Homeowner's insurance may not cover workplace injuries, and workers' compensation requirements vary based on the number of employees and specific circumstances.

Family Dynamics and Boundaries

Professional employment management helps maintain appropriate boundaries between family relationships and employer-employee obligations. This clarity protects both your family and your caregiver from misunderstandings or conflicts.

Continuity Planning

When employment is properly structured and documented, it's easier to maintain continuity if caregiver changes become necessary. Professional management systems make transitions 

Why Clara's Approach Works

Clara understands that families want to focus on their loved one's wellbeing, not navigate employment law complexities. Our comprehensive approach handles all aspects of caregiver employment, from initial screening and hiring through ongoing payroll management and compliance.

We use secure, modern systems that ensure your caregiver is paid accurately and on time while maintaining all necessary records and filings. Our team stays current with changing regulations so you don't have to, and we're always available to answer questions or address concerns.

More importantly, Clara's focus remains on connecting families with exceptional caregivers who provide compassionate, professional care. By handling the employment complexities, we create space for meaningful care relationships to flourish.

Moving Forward with Confidence

Providing in-home care for a loved one is one of the most important decisions you'll make. Understanding and managing employment obligations shouldn't add stress to an already challenging situation. With proper support and guidance, you can create a care arrangement that meets your loved one's needs while protecting your family legally and financially.

Whether you're just beginning to explore in-home care options or need support managing an existing care arrangement, Clara's team is here to help. We provide the expertise, systems, and ongoing support that make quality home care both achievable and sustainable.

Contact Clara today for a free consultation about your family's care needs and learn how we can simplify the employment aspects while enhancing the care experience for everyone involved. Better care really does start with getting the details right, and Clara is here to help you succeed.

Ready to explore how Clara can support your family's home care journey? Reach out today for expert guidance, comprehensive support, and the peace of mind that comes from knowing everything is handled properly. Your loved one deserves exceptional care, and your family deserves exceptional support.