A health care aide, through an agency, comes to my home for 2 hrs each morning to care for my mother. I signed a document from the agency prohibiting me from “hiring away” this aide, under penalty of $10,000 if I do so. May I pay her separately for additional hours, assuming I continue the arrangement with the agency and pay the appropriate household employment taxes?

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I'd be really leery of this kind of arrangement, as it could infer that you ARE trying to hire her away, or making private arrangements (which you would be).

Have you just asked the agency for more hours? I know that your aide wouldn't get as much as if you paid her privately, but you run other risks as well. The private arrangement might be construed as just that, putting you in the position of an employer w/o the benefit of the comp and liability as well as tax reporting that would be provided by the agency.

You indicate you would pay the employment taxes, so I assume you're aware that you'd have to take deductions and make quarterly payments (depending on whether the wages meet the minimum tax requirements). So essentially the aide would have two employers for one job.

How do you plan to handle the insurance? Would you get workers comp insurance, liability insurance? Have you costed them out? I think the cost of either or both would be greater than paying her for additional hours through the agency.

I'd really avoid something like this; talk with the agency and ask if you can pay bonuses through them, but read the contract first to determine what other gambles you would be taking. From the ones I've read, most bonuses are prohibited.

You can express your high level of satisfaction with her and ask the agency how to work out compensating her for that. But be aware that the virtual cash register for the agency's income will start running as soon as you raise the issue.

There's not really any good solution to paying her privately though.
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