This section of the Act applies when an employing unit pays cash wages of $1,000.00 or more during a calendar quarter in the current or preceding calendar year for domestic service in a private home, local college or local chapter of a college fraternity or sorority.

Only cash wages are included when determining if liability has occurred. If an employee is given room and board in lieu of, or in addition to cash wages, it is not to be considered when determining if the $1,000.00 threshold has been met. Once liability has been established, the "fair market value" of remuneration other than cash is taxable and should be reported as wages. No duration of time must be met before liability is incurred.

Work performed in a private home by cooks, waiters, butlers, housekeepers, housemen, watchmen, governess, maids, companions, nursemaids, valets, baby-sitters, janitors, laundresses, furnacemen, caretakers, gardeners, footmen, grooms, seamstresses, handymen, and family automobile chauffeurs is considered to be domestic employment.

A common misconception is that in order to qualify as domestic employment, services must be performed in a private residence. Domestic service performed in a college club, fraternity or sorority is also considered domestic employment if the employer pays $1,000 or more, in cash wages, during a calendar quarter.

Liability under this section of the law is normally based on Status Reports. If liability is determined by way of a phone call inquiring about a quarterly report, an FL-160, C-1 Request Letter, must be sent to request completion of a Status Report.

In reviewing a Status Report to determine 201.027 liability, attention should be given to the following items:

1. Determine if employer has indicated that they have paid $1,000.00 or more to domestic employees.
   
   
2. If $1000.00 has not been paid, has employer elected coverage.
   
   
3. If a quarterly report showing less than $1,000.00 paid to domestic employees is received with money. See Chapter 1 - "New Accounts 201.024".
   
   
4. If the employer is liable for FUTA. See Chapter 1 – "New Accounts 201.025".

If liability is not evident by the review of the Status Report, contact the employer by phone and determine if liability has been reached or if they anticipate liability in the future.  Trace account if necessary for future liability. 

If the employer is a corporation that indicates domestic employment, you must make a phone call to investigate. A corporation cannot qualify for domestic employment unless the corporation was formed specifically for the sole purpose of running the household. This scenario is extremely rare and should be thoroughly examined.

Consumer Directed Services

Consumer Directed Services (CDS) is a program established as a result of Senate Bill 1586. CDS allows disabled individuals who are Texas Department of Aging and Disability Services (DADS) consumers to (self-direct) hire and manage their own attendants (service providers.) The program is designed to allow DADS consumers more control in the hiring process rather than being appointed caregivers. Individuals set the wages based on their service budget and may employ friends and family members. Individuals enrolled in CDS must work with a Consumer Directed Services Agency (CDSA) who will provide financial management services, such as processing payroll and taxes.

CDSA gets a fee for providing financial support services. The employer sets their own budget. The employer does the interviewing and can fire an employee. The CDSA can assist the employer with the hiring process, how to set an hourly wages, est. benefits, etc. The employer must submit the employee timesheets to the CDSA. The employer is also assigned a Case Manager. Reference: Texas Administrative Code Title 40, Part 1, Chapter 41, Subchapter’s A, B & C. This code defines the responsibilities of employers and their designated representative.

If a CDS customer/provider/or CDSA is not cooperating with TWC, get their name and notify your supervisor. They may be told they cannot participate in the program if they do not comply.

Information about the program can be found at the following link: http://www.dads.state.tx.us/providers/CDS/index.cfm

When establishing accounts for recipients of Vouchers (Voucher Program -- SB 1586) and determining who the "employer" is use 18 years of age as the standard. That is, accounts set up that involve a healthcare recipient who is 18 or older should be styled in their name. Exceptions may still occur however, in situations where the individual receiving the care is over 18 but has been declared mentally disabled or otherwise disadvantaged to such a degree that they are unable to act on their own behalf. In such cases, a parent or guardian has been appointed by the court to act on their behalf and would be considered the employer. Accounts set up that involve a health care recipient under 18 should continue to be styled in the parents’ or guardians’ name.

To classify an account liable under section 201.027 using the STA screen: