Hiring Employees In Family Child Care

Thinking About Hiring an Employee?

For many family child care providers, the thought of hiring an employee can be frightening or overwhelming. I know it was for me! Being an employer comes with a lot responsibilities; especially if you do it legally. The process of actually hiring your assistant can be confusing. This, along with the ongoing paperwork and supervising duties make a lot of providers wonder if it’s really worth it to hire an employee.

Unfortunately, some providers decide to go ahead and hire someone, but do it ‘under the table’, without following the required policies and procedures, including wage and labor laws. They think this will save them time, money, paperwork and hassle. In reality though, hiring an employee ‘under the table’ can cost a provider way more than doing it the legal way. Hopefully, this information will help you to see the benefits of hiring legally, and also help you through the process.

Handouts, Worksheets and Videos

When hiring an assistant, remember to ask for, and check references and verify professional and educational credentials. I would also recommend observing how a potential employee interacts with the children in your program and that you have a probation period. You should have a written job description and policies. It is as important for you to be as clear with your employee about what your expectations are as it is with your parents.

There are two areas that you need to make sure you are legally compliant in; they are wage and labor laws, and your state’s licensing regulations. First, I will go over some of the issues that relate to everyone, but, because a lot of these issues differ state to state, you will need to be sure to look up the requirements for your particular state. I will try to provide the resources here for you to do that. To be sure that you are complying with your state regulations, check with your local licensing or registration office.

federal minimum wage posterThere are a number of federal laws that employers must follow when hiring employees. Equal Employment Opportunity (EEO) laws prohibit discrimination on the basis of race, color, religion, sex, age, national origin, or status as an individual with a disability or protected veteran. The Fair Labor Standards Act (FLSA) covers federal minimum wage provisions. The federal minimum wage is currently $7.25 per hour. However, Many states (and some municipalities) also have minimum wage laws. Some state laws provide greater employee protections; employers must comply with both.

Click here for Minimum Wage Laws by states as of January 1, 2012

Federal Minimum Wage Poster
Federal Minimum Wage Poster (Spainsh)

Also from The Fair Labor Standards Act (FLSA): Covered nonexempt employees must receive overtime pay for hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods) at a rate not less than one and one-half times the regular rate of pay. There is no limit on the number of hours employees 16 years or older may work in any workweek. The FLSA does not require overtime pay for work on weekends, holidays, or regular days of rest, unless overtime is worked on such days.

The US Department of Labor provides FLSA fact sheets for many industries. Here is the one for child care programs. Please note that it states that if you are a family child care program and you hire an assistant, you are covered under this category: Daycare Centers and Preschools Under the Fair Labor Standards Act

The Family and Medical Leave Act (FMLA) entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Eligible employees are entitled to:Twelve workweeks of leave in a 12-month period for:
  • The birth of a child and to care for the newborn child within one year of birth
  • The placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement
  • To care for the employee’s spouse, child, or parent who has a serious health condition
  • A serious health condition that makes the employee unable to perform the essential functions of his or her job
  • Any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty”
  • Twenty-six workweeks of leave during a single 12-month period to care for a covered service member with a serious injury or illness who is the spouse, son, daughter, parent, or next of kin to the employee (military caregiver leave.

To find out state labor laws in your state, click here for a list of State Labor Offices.

You may choose to do your own payroll using accounting software, or hire a payroll service.
If you already have a relationship with an accountant, he or she may also do payroll, just ask. The cost of a payroll service can vary as does what they offer. I highly recommend using a payroll service such as Paychex because they, not only are very helpful in getting you set up, but they also electronically submit your payroll taxes, complete your quarterly reports, complete and file W-2s at the end of the year and can also provide you with other services such as Worker’s Compensation Insurance.

Some of the steps and/or forms you will need to complete during the hiring process are:
  • Apply for an Employer ID Number (EIN): I truly hope that you already have one of these (you don’t need to be an employer to get one.) To apply for an EIN, Go to the IRS website. It takes just a couple of minutes.
  • Have your employee fill out the following forms:
    * Form W-9 – Request for Taxpayer Identification Number and Certification
    * Form W-4 – Employee’s Withholding Allowance Certificate
    * Form I-9 – Employment Eligibility Verification
  • Purchase Worker’s Compensation – Most employers are required by law to have workers’ compensation insurance, even if they have only one employee (This may vary by state, so make sure you look up your state’s laws). If your employees get hurt or sick because of work, you are required to pay for workers’ compensation benefits. Workers’ comp insurance provides six basic benefits: medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits or vocational rehabilitation and death benefits.
  • File Form 941 quarterly – Some payroll services will do this for you.
A word about 1099 Misc. and hiring an assistant:
An assistant is an employee, not a contractor, and therefore cannot be paid on 1099 Misc. (Read the sections on taxes for more information.)

Substitutes – A substitute can be paid on a 1099 ONLY IF the person is a true independent contractor who advertises to the public, gives you a tax id number, provides services to multiple child care providers, and has a business contract for you to sign. You should also receive an invoice or bill.

Forms and Records In Family Child Care

Free Child Care Forms
For many providers, keeping their child care forms and files in order is much more difficult than caring for the children. It certainly isn’t nearly as fun as being with the kids, but if you don’t keep the children’s forms and files current, you are not taking care of your business, and you could be putting the children at risk. Imagine if, God forbid, a child was injured and you couldn’t find the emergency contact information for him or her…

If you don’t already have a complete file for each of the kids in your program, I really recommend putting one together right now. Some providers keep each child’s file in a separate folder, others use binders. You should use the method that works for you, and that you will be able to keep up with.

These child care forms are to get you started, but be sure to check with you local licensing agency to see what other forms you may need. Many states have additional official forms that you may need to keep on each child.

Feel free to add your logo and business name to the forms and customize them to better fit your individual program.

You should have parents sign-in at the time they drop off their child, and sign-out when they pick their child up each day. This is really important for several reasons.

  • For liability purposes, you want to have documentation showing when a child is in your program and when he or she is in the care of their parents.
  • If there is a fire or natural disaster and you need to be evacuated, the sign-in sheets let emergency personnel know if there is anyone still inside.
  • Your sign-in sheets also help you keep track of enrollment which is very handy when you are doing your budget or taxes.
  • In some states, licensing will also check to make sure that you are having parents sign-in and out.

Family Child Care Licensing and Regulation

If you are interested in becoming a licensed or registered provider, you should contact your local child care licensing office. You will also want to check in with them periodically to see if there are any regulatory or policy changes that affect your business.

If you are a parent and would like to learn about the licensing process or review a providers record, you can contact the local licensing office as well.

On this page, you’ll find resources for family child care providers in California as well as a link to licensing and registration agencies in the other 49 states.

Marketing Your Family Child Care

Marketing Your Family Child Care

Writing Your Family Child Care Business Plan

Think of your Business Plan as your own personal tour guide

It’s not so much the actual plan itself that is most beneficial to your business. The real value is gained simply by completing the process of doing the research, creating a plan, and writing it down. Your business plan is like a roadmap for your business, providing research and analysis to determine the direction the business needs to go, keeping you on track, and setting milestones that enable you to measure your successes.

A business plan enables a business to:

  • Establish a vision and determine direction
  • Stay on course
  • Set goals and recognize successes
  • Chart and review operations
  • Establish and maintain fiscal fitness
  • Conduct thorough research
  • Develop a marketing plan
  • Determine the feasibility of the business
  • Prepare for future expansion
  • Plan for an exit strategy

business planOnce a business plan is written, it should be reviewed and revised on a regular basis.

Download your Business Plan Worksheet to the right and I’ll take you through this overview and then, after you’ve read it, begin working on your own business plan.
You can download the additional worksheets designed to help you develop your mission statement if don’t have one and to do an analysis of your strengths and weaknesses, your competition and market demographics.

The Elements of a Business plan
Every plan is unique to a specific business and written with different intents. Because of this, what is included in a business plan, the amount of analysis and detail, as well as the format of every plan, will be different.
As a general guideline, the elements of a business plan are:

  • Title Page
  • Table of Contents
  • Executive Summary: The executive summary introduces your business. It is a brief summary of the information you will provide in the plan’ – company, operations, marketing and financial overviews
  • Purpose: This section tells what your business is, and why it exists. Some of the information to include in this section is:
    * Business description- A brief overview of what you business does and, if not a start-up, its history
    * Structure – Are you a sole proprietor, partnership or corporation?
    * Owners – Who owns the company?
    * Location – Where is your business located and why? What community? What type of facility? Why?
    * Hours of operation
    * Business description
    * Product or service
    * Target market
    * Competitive edge / USP
    * Business achievements – and, if any, its assets
  • Industry Analysis
    * Industry economics and trends – any trends or current events that may influence your business
    * Opportunities and obstacles – Innovations, progress or inventions in your industry
    * Regulations
    * Economic factors- The effect of the economy, both local and national on your business
    * Price comparisons – Where do your prices fall in the range of your industry?
    * Location – What are the positives and negatives of your physical location?
    * Competition – Who is your competition? In what areas are they better than you? What improvements must you make to compete? What are their weaknesses, can you fill the need they aren’t fulfilling?
    * SWOT handout
    * SWOT worksheet
  • Business performance – Finally, how do you expect your business to perform in the market, given the industry climate? Your business:
    SWOT Analysis* Owner(s)
    * Staffing
    * Business operations
    * Equipment, technology, facility, utilities, services
    * Production or service methods
    * Quality control
    * Inventory and supply
    * Customer service policies
    * Professional resources – CPA, banks, lawyers, insurance brokers
  • Market Research
    * The market
    * Demographics – income and spending habits, personal characteristics, standard of living, household characteristics
    Psychographics – opinions and values, political views, style and taste
    * Market segment – prospective customers with like demographics or psychographics
    * Market Demographics and Competition handout
  • Marketing strategy
    * USP – Unique Selling Proposition – Which of the following make your product or service unique?
    Your product or service is New, no one else offers it
    Your product or service is Improved, someone else may offer it, but yours is an improved version
    Your product or service offers Convenience
    Your product or service is Specialized, you cater only to a specific market or industry
    Your product or service is of Higher quality than your competitors

    * SWOT – strengths / opportunities / weaknesses / threats
    * Predicting your market share – How much of the target market can you realistically expect to capture?
    * The 4 Ps – Product, Price, Place and Promotion
    * Family Child Care 4 P’s of Marketing handout

  • Marketing plan
    * Marketing strategies and channels
    * Marketing budget
    * Marketing calendar
    * Sales plan and forecast
    * Selling channels
    * Selling tools
    * Increasing customer base
    * Sales cycles and strategies
    * Sales forecast
  • Financials
    * Start-up costs
    * Operating budget
    * Funding sources
    * Cash flow statement
    * Profit and loss statement
    * Insurance

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