What is Direct Employment of a Private Caregiver? How Does It Differ From Agency-Based Home Care?

When it comes to arranging in-home care for your aging loved one, you might find yourself at a crossroads, choosing between agency-based care and direct employment of a private caregiver.

While home care agencies offer in-home support by assigning caregivers they employ, you may be one of many who prefer something a bit more personal — a setup where you decide who provides care and when. Maybe rigid schedules or rotating caregivers from an agency aren't a great fit for your loved one. Or maybe you already have someone in mind — your friend’s daughter, someone you know from church, or even your trusted gardener — who’s kind, dependable, and willing to help out.

In these situations, hiring a private caregiver directly can be a more flexible, affordable, and personal alternative to agency-based care. But with that control comes a new role: you become the caregiver’s employer. This can seem intimidating, but with proper knowledge, planning and support, can be surprisingly straightforward.

While both agency-based care and direct, private hire can provide quality, personalized support, the structure behind each is very different—and has important implications for cost, flexibility, and legal responsibility.

This article outlines the key differences between these two models, the pros and cons of each, and what to consider if you’re thinking about hiring a caregiver directly.

Private vs. Agency-Based Care: What's the Difference?

The distinction between a private caregiver and an agency-based caregiver doesn’t lie in the care itself, but in the employment model.

Agency-Based Caregivers

A caregiver who works through a home care agency is an employee of that agency. The agency handles:

Recruiting, screening and training caregivers
Assigning caregivers to clients
Managing payroll, taxes, and insurance
Ensuring legal compliance

In the Bay Area, agencies charge between $45 and $57 per hour for care (1). Caregivers typically receive between minimum wage and $25 per hour of what families pay. The difference covers the agency’s administrative overhead, and generates a profit for the agency itself.

Private (Directly Employed) Caregivers

When you hire a caregiver privately, you become their employer. This means:

You must find and vet the caregiver yourself
You negotiate their pay, schedule, and duties
You manage payroll and tax withholdings
You are legally responsible for employment compliance

This approach offers greater flexibility and potential cost savings. Eliminating the overhead associated with agencies means families pay less per hour, while caregivers receive higher take-home pay, but also involves a shift of legal responsibility onto the family.

See here for more on “Why Should I Employ My Caregiver Legally?”.

Pros and Cons of Each Model

Advantages of Hiring a Private Caregiver

More Control: Families can select their caregiver, set the schedule, and shape care around the care recipient’s preferences.
Greater Flexibility: Care hours and tasks can be tailored to changing needs without navigating agency policies or strict minimums.
Cost Savings: Without agency overhead, many families find they can pay a competitive wage to the caregiver while still saving significantly overall—often 30% or more.
Consistency: Employing one caregiver directly can lead to a more stable and trusting relationship, which is especially important for seniors.

Challenges of Hiring Privately

Administrative Responsibility: As an employer, you must manage hiring, background checks, payroll, and legal compliance.
No Backup Support: If your caregiver is unavailable, you are responsible for finding coverage.
Tax Compliance: You must register employees with appropriate government agencies, and calculate, withhold, and remit all employer taxes.
Legal and Financial Liability: You must carry workers’ compensation insurance and follow all employment laws, including wage and overtime rules, paid sick leave and more. You can learn more about Payroll & Compliance in California here.

Advantages of Agency Care

Vetted Caregivers: Licensed agencies typically conduct thorough background checks and provide training to their caregivers.
Backup Support: If a caregiver is unavailable, agencies can usually provide a substitute quickly.
Reduced Administrative Burden: Agencies handle payroll, taxes, and insurance, simplifying the process for families.

Drawbacks of Agency Care

Higher Costs: Agencies typically include a high markup, making this option significantly more expensive than hiring a private caregiver. Many agencies in the Bay Area charge around $45-$57/hour.
Strict Minimums: Families may have less say in choosing their caregiver or setting the care schedule. Agencies have strict minimums, often requiring that families receive 4 hours of care per day, which is not always necessary or financially viable for seniors.
Less Control and Potential for Inconsistency: Families have less say in choosing their caregiver or setting the care schedule. Some agencies rotate caregivers, which can disrupt the continuity of care and reduce patients' ability to bond with their caregiver. Even agencies that strive for consistency suffer from caregiver turnover of ~80% per year, increasing the risk of disruption (2).

Why Families Choose Direct Employment

Despite the added complexity, many families choose to hire caregivers directly because of the benefits:

A stronger caregiver-client relationship through consistent staffing
Flexible scheduling, especially for part-time or short shifts
Lower overall costs without sacrificing care quality or caregiver wages

However, the legal and administrative requirements can be daunting without support – and this is where a service like Clara can help.

Clara Home Care: Direct Employment, Without The Headache.

Clara makes it possible to access the flexibility and cost benefits of hiring privately — without taking on the full burden of compliance and payroll. Whether you already know who you want to hire or need help finding a great match, Clara supports every step of the process.

Our care experts connect families with a vetted network of over 1,000 background-checked, qualified caregivers in the Bay Area, making it easy to find someone who fits your loved one’s needs and personality. And if your regular caregiver is unavailable — due to illness, vacation, or an emergency — we can help provide substitute coverage so there’s no gap in care.

From there, we take care of the heavy lifting of legal employment, including:

Navigating employee classification and employer registration (state and federal)
Setting up compliant payroll with detailed pay stubs
Ensuring compliance with California wage laws, overtime rules, and tax obligations
Maintaining workers’ compensation coverage and accurate employment records

With Clara, you get the best of both worlds: the freedom and cost-effectiveness of private hire, backed by a team that ensures everything is done right — legally, safely, and smoothly. That way, you can focus on what really matters: getting consistent, high-quality care for your loved one.

Conclusion

Directly employing a private caregiver gives you control, customization, and savings—but it also makes you the employer, with all the responsibilities that come with it. If you’re trying to select the best care solution for your loved one, it is important to understand the responsibilities associated with direct employment (compared to agency-based care) so that you can make an informed decision.

For many families, direct employment is manageable with the right support. Clara provides the tools and expertise you need to discover and legally employ a qualified caregiver while protecting your household and your caregiver.

To learn more about how Clara can support you through the private hiring process, contact us at (415) 985-0926 or schedule a call with one of our home care experts.

Sources

When it comes to arranging in-home care for your aging loved one, you might find yourself at a crossroads, choosing between agency-based care and direct employment of a private caregiver.

While home care agencies offer in-home support by assigning caregivers they employ, you may be one of many who prefer something a bit more personal — a setup where you decide who provides care and when. Maybe rigid schedules or rotating caregivers from an agency aren't a great fit for your loved one. Or maybe you already have someone in mind — your friend’s daughter, someone you know from church, or even your trusted gardener — who’s kind, dependable, and willing to help out.

In these situations, hiring a private caregiver directly can be a more flexible, affordable, and personal alternative to agency-based care. But with that control comes a new role: you become the caregiver’s employer. This can seem intimidating, but with proper knowledge, planning and support, can be surprisingly straightforward.

While both agency-based care and direct, private hire can provide quality, personalized support, the structure behind each is very different—and has important implications for cost, flexibility, and legal responsibility.

This article outlines the key differences between these two models, the pros and cons of each, and what to consider if you’re thinking about hiring a caregiver directly.

Private vs. Agency-Based Care: What's the Difference?

The distinction between a private caregiver and an agency-based caregiver doesn’t lie in the care itself, but in the employment model.

Agency-Based Caregivers

A caregiver who works through a home care agency is an employee of that agency. The agency handles:

Recruiting, screening and training caregivers
Assigning caregivers to clients
Managing payroll, taxes, and insurance
Ensuring legal compliance

In the Bay Area, agencies charge between $45 and $57 per hour for care (1). Caregivers typically receive between minimum wage and $25 per hour of what families pay. The difference covers the agency’s administrative overhead, and generates a profit for the agency itself.

Private (Directly Employed) Caregivers

When you hire a caregiver privately, you become their employer. This means:

You must find and vet the caregiver yourself
You negotiate their pay, schedule, and duties
You manage payroll and tax withholdings
You are legally responsible for employment compliance

This approach offers greater flexibility and potential cost savings. Eliminating the overhead associated with agencies means families pay less per hour, while caregivers receive higher take-home pay, but also involves a shift of legal responsibility onto the family.

See here for more on “Why Should I Employ My Caregiver Legally?”.

Pros and Cons of Each Model

Advantages of Hiring a Private Caregiver

More Control: Families can select their caregiver, set the schedule, and shape care around the care recipient’s preferences.
Greater Flexibility: Care hours and tasks can be tailored to changing needs without navigating agency policies or strict minimums.
Cost Savings: Without agency overhead, many families find they can pay a competitive wage to the caregiver while still saving significantly overall—often 30% or more.
Consistency: Employing one caregiver directly can lead to a more stable and trusting relationship, which is especially important for seniors.

Challenges of Hiring Privately

Administrative Responsibility: As an employer, you must manage hiring, background checks, payroll, and legal compliance.
No Backup Support: If your caregiver is unavailable, you are responsible for finding coverage.
Tax Compliance: You must register employees with appropriate government agencies, and calculate, withhold, and remit all employer taxes.
Legal and Financial Liability: You must carry workers’ compensation insurance and follow all employment laws, including wage and overtime rules, paid sick leave and more. You can learn more about Payroll & Compliance in California here.

Advantages of Agency Care

Vetted Caregivers: Licensed agencies typically conduct thorough background checks and provide training to their caregivers.
Backup Support: If a caregiver is unavailable, agencies can usually provide a substitute quickly.
Reduced Administrative Burden: Agencies handle payroll, taxes, and insurance, simplifying the process for families.

Drawbacks of Agency Care

Higher Costs: Agencies typically include a high markup, making this option significantly more expensive than hiring a private caregiver. Many agencies in the Bay Area charge around $45-$57/hour.
Strict Minimums: Families may have less say in choosing their caregiver or setting the care schedule. Agencies have strict minimums, often requiring that families receive 4 hours of care per day, which is not always necessary or financially viable for seniors.
Less Control and Potential for Inconsistency: Families have less say in choosing their caregiver or setting the care schedule. Some agencies rotate caregivers, which can disrupt the continuity of care and reduce patients' ability to bond with their caregiver. Even agencies that strive for consistency suffer from caregiver turnover of ~80% per year, increasing the risk of disruption (2).

Why Families Choose Direct Employment

Despite the added complexity, many families choose to hire caregivers directly because of the benefits:

A stronger caregiver-client relationship through consistent staffing
Flexible scheduling, especially for part-time or short shifts
Lower overall costs without sacrificing care quality or caregiver wages

However, the legal and administrative requirements can be daunting without support – and this is where a service like Clara can help.

Clara Home Care: Direct Employment, Without The Headache.

Clara makes it possible to access the flexibility and cost benefits of hiring privately — without taking on the full burden of compliance and payroll. Whether you already know who you want to hire or need help finding a great match, Clara supports every step of the process.

Our care experts connect families with a vetted network of over 1,000 background-checked, qualified caregivers in the Bay Area, making it easy to find someone who fits your loved one’s needs and personality. And if your regular caregiver is unavailable — due to illness, vacation, or an emergency — we can help provide substitute coverage so there’s no gap in care.

From there, we take care of the heavy lifting of legal employment, including:

Navigating employee classification and employer registration (state and federal)
Setting up compliant payroll with detailed pay stubs
Ensuring compliance with California wage laws, overtime rules, and tax obligations
Maintaining workers’ compensation coverage and accurate employment records

With Clara, you get the best of both worlds: the freedom and cost-effectiveness of private hire, backed by a team that ensures everything is done right — legally, safely, and smoothly. That way, you can focus on what really matters: getting consistent, high-quality care for your loved one.

Conclusion

Directly employing a private caregiver gives you control, customization, and savings—but it also makes you the employer, with all the responsibilities that come with it. If you’re trying to select the best care solution for your loved one, it is important to understand the responsibilities associated with direct employment (compared to agency-based care) so that you can make an informed decision.

For many families, direct employment is manageable with the right support. Clara provides the tools and expertise you need to discover and legally employ a qualified caregiver while protecting your household and your caregiver.

To learn more about how Clara can support you through the private hiring process, contact us at (415) 985-0926 or schedule a call with one of our home care experts.

Sources

When it comes to arranging in-home care for your aging loved one, you might find yourself at a crossroads, choosing between agency-based care and direct employment of a private caregiver.

While home care agencies offer in-home support by assigning caregivers they employ, you may be one of many who prefer something a bit more personal — a setup where you decide who provides care and when. Maybe rigid schedules or rotating caregivers from an agency aren't a great fit for your loved one. Or maybe you already have someone in mind — your friend’s daughter, someone you know from church, or even your trusted gardener — who’s kind, dependable, and willing to help out.

In these situations, hiring a private caregiver directly can be a more flexible, affordable, and personal alternative to agency-based care. But with that control comes a new role: you become the caregiver’s employer. This can seem intimidating, but with proper knowledge, planning and support, can be surprisingly straightforward.

While both agency-based care and direct, private hire can provide quality, personalized support, the structure behind each is very different—and has important implications for cost, flexibility, and legal responsibility.

This article outlines the key differences between these two models, the pros and cons of each, and what to consider if you’re thinking about hiring a caregiver directly.

Private vs. Agency-Based Care: What's the Difference?

The distinction between a private caregiver and an agency-based caregiver doesn’t lie in the care itself, but in the employment model.

Agency-Based Caregivers

A caregiver who works through a home care agency is an employee of that agency. The agency handles:

Recruiting, screening and training caregivers
Assigning caregivers to clients
Managing payroll, taxes, and insurance
Ensuring legal compliance

In the Bay Area, agencies charge between $45 and $57 per hour for care (1). Caregivers typically receive between minimum wage and $25 per hour of what families pay. The difference covers the agency’s administrative overhead, and generates a profit for the agency itself.

Private (Directly Employed) Caregivers

When you hire a caregiver privately, you become their employer. This means:

You must find and vet the caregiver yourself
You negotiate their pay, schedule, and duties
You manage payroll and tax withholdings
You are legally responsible for employment compliance

This approach offers greater flexibility and potential cost savings. Eliminating the overhead associated with agencies means families pay less per hour, while caregivers receive higher take-home pay, but also involves a shift of legal responsibility onto the family.

See here for more on “Why Should I Employ My Caregiver Legally?”.

Pros and Cons of Each Model

Advantages of Hiring a Private Caregiver

More Control: Families can select their caregiver, set the schedule, and shape care around the care recipient’s preferences.
Greater Flexibility: Care hours and tasks can be tailored to changing needs without navigating agency policies or strict minimums.
Cost Savings: Without agency overhead, many families find they can pay a competitive wage to the caregiver while still saving significantly overall—often 30% or more.
Consistency: Employing one caregiver directly can lead to a more stable and trusting relationship, which is especially important for seniors.

Challenges of Hiring Privately

Administrative Responsibility: As an employer, you must manage hiring, background checks, payroll, and legal compliance.
No Backup Support: If your caregiver is unavailable, you are responsible for finding coverage.
Tax Compliance: You must register employees with appropriate government agencies, and calculate, withhold, and remit all employer taxes.
Legal and Financial Liability: You must carry workers’ compensation insurance and follow all employment laws, including wage and overtime rules, paid sick leave and more. You can learn more about Payroll & Compliance in California here.

Advantages of Agency Care

Vetted Caregivers: Licensed agencies typically conduct thorough background checks and provide training to their caregivers.
Backup Support: If a caregiver is unavailable, agencies can usually provide a substitute quickly.
Reduced Administrative Burden: Agencies handle payroll, taxes, and insurance, simplifying the process for families.

Drawbacks of Agency Care

Higher Costs: Agencies typically include a high markup, making this option significantly more expensive than hiring a private caregiver. Many agencies in the Bay Area charge around $45-$57/hour.
Strict Minimums: Families may have less say in choosing their caregiver or setting the care schedule. Agencies have strict minimums, often requiring that families receive 4 hours of care per day, which is not always necessary or financially viable for seniors.
Less Control and Potential for Inconsistency: Families have less say in choosing their caregiver or setting the care schedule. Some agencies rotate caregivers, which can disrupt the continuity of care and reduce patients' ability to bond with their caregiver. Even agencies that strive for consistency suffer from caregiver turnover of ~80% per year, increasing the risk of disruption (2).

Why Families Choose Direct Employment

Despite the added complexity, many families choose to hire caregivers directly because of the benefits:

A stronger caregiver-client relationship through consistent staffing
Flexible scheduling, especially for part-time or short shifts
Lower overall costs without sacrificing care quality or caregiver wages

However, the legal and administrative requirements can be daunting without support – and this is where a service like Clara can help.

Clara Home Care: Direct Employment, Without The Headache.

Clara makes it possible to access the flexibility and cost benefits of hiring privately — without taking on the full burden of compliance and payroll. Whether you already know who you want to hire or need help finding a great match, Clara supports every step of the process.

Our care experts connect families with a vetted network of over 1,000 background-checked, qualified caregivers in the Bay Area, making it easy to find someone who fits your loved one’s needs and personality. And if your regular caregiver is unavailable — due to illness, vacation, or an emergency — we can help provide substitute coverage so there’s no gap in care.

From there, we take care of the heavy lifting of legal employment, including:

Navigating employee classification and employer registration (state and federal)
Setting up compliant payroll with detailed pay stubs
Ensuring compliance with California wage laws, overtime rules, and tax obligations
Maintaining workers’ compensation coverage and accurate employment records

With Clara, you get the best of both worlds: the freedom and cost-effectiveness of private hire, backed by a team that ensures everything is done right — legally, safely, and smoothly. That way, you can focus on what really matters: getting consistent, high-quality care for your loved one.

Conclusion

Directly employing a private caregiver gives you control, customization, and savings—but it also makes you the employer, with all the responsibilities that come with it. If you’re trying to select the best care solution for your loved one, it is important to understand the responsibilities associated with direct employment (compared to agency-based care) so that you can make an informed decision.

For many families, direct employment is manageable with the right support. Clara provides the tools and expertise you need to discover and legally employ a qualified caregiver while protecting your household and your caregiver.

To learn more about how Clara can support you through the private hiring process, contact us at (415) 985-0926 or schedule a call with one of our home care experts.