Many families in San Diego and across California assume that hiring a private caregiver will cost less than engaging a home care agency. That assumption makes sense at first glance—an independent caregiver may quote a lower hourly rate than an agency charges. However, “cheaper” doesn’t always mean better value.
Several hidden costs and legal responsibilities come with privately hiring a caregiver. When you factor in taxes, insurance, labor laws, and potential risks, a private caregiver may not be as affordable as it first appears. This article breaks down those hidden costs—specifically for California and San Diego—so adult children and aging parents can make informed, financially sound decisions.
The Appeal of Private Hiring vs. Agency Care
In California, agency-provided home care typically averages $35–$40 per hour, exceeding the national average. In San Diego, the median cost of a licensed home health aide is typically $39 per hour (based on 2024 surveys), while privately hiring an individual can cost $25–$30 per hour. On the surface, that difference suggests substantial savings.
But comparing hourly rates alone isn’t an “apples to apples” comparison. Agencies charge more because they handle behind-the-scenes costs and provide protections that private hires typically do not. Below are the most common hidden expenses and risks that appear the moment you become an employer.
Hidden Cost #1: Becoming an Employer — Payroll Taxes and Paperwork
When you hire a private caregiver directly, you effectively become an employer in the eyes of the law. That means handling payroll taxes and administrative duties that an agency normally manages.
For example, in 2025, paying a household worker $2,800 or more in a year generally requires withholding and paying Social Security and Medicare taxes (FICA). You may also owe federal unemployment (FUTA) taxes if you pay $1,000 or more in a calendar quarter, plus applicable California employment taxes.
What This Means in Practice
When hiring privately, you take on responsibilities like:
✓ Registering as an employer (getting an EIN and registering with tax agencies)
✓ Withholding and paying payroll taxes (employee share + employer match)
✓ Filing required payroll documents (Schedule H, issuing a W-2, W-3, and possible CA quarterly filings)
✓ Verifying work eligibility (I-9 requirements)
Managing these tasks can be time-consuming and may require hiring a payroll service or accountant, adding another cost.
✕ Paying “under the table” to avoid taxes can backfire—leading to back taxes, penalties, and increased scrutiny if a caregiver ever files for unemployment or reports income.
Simply put: payroll compliance isn’t optional. It’s part of the real cost of employing a caregiver.
Hidden Cost #2: Workers’ Compensation and Injury Liability
One of the biggest hidden expenses (and potential nightmares) of hiring privately is workers’ compensation coverage. When you use a licensed home care agency, the agency is the employer and carries workers’ compensation. When you hire directly, you may be legally required to carry it yourself.
California law is clear: domestic workers (including in-home caregivers) who work at least 52 hours or earn $100 or more in a 90-day period must be covered by a workers’ compensation policy. In practical terms, even part-time caregivers often meet this threshold quickly.
The Risks of Non-Compliance
▶ If a caregiver is injured on the job and you do not have workers’ comp, you could be personally responsible for medical bills and lost wages.
▶ Homeowner’s insurance typically does NOT cover workplace injuries to domestic employees.
▶ Not carrying required coverage is illegal in California and can lead to serious penalties and liability exposure.
The Solution
✓ Purchase workers’ compensation (often as a rider to a homeowner’s policy or through a separate carrier)
✓ Budget for the annual premium as part of your true cost of care
✓ Or use a licensed home care agency that includes workers’ comp, liability coverage, and bonding in their rate
Without workers’ comp, you are essentially “self-insuring” and hoping nothing goes wrong—an expensive gamble if an accident happens.
Hidden Cost #3: Overtime and Labor Law Compliance
Home care isn’t always a simple 9-to-5 schedule. Longer shifts, overnights, and extended weekly hours are common. Agencies manage schedules and compliance. But when you hire privately, you’re responsible for understanding and following California labor laws—including overtime rules.
California’s Domestic Worker Bill of Rights
California’s Domestic Worker Bill of Rights requires overtime pay for many in-home personal attendants:
✓ Overtime at 1.5x after 9 hours in a day
✓ Overtime at 1.5x after 45 hours in a week (40 hours under federal law)
If a caregiver works a 12-hour day, 3 of those hours must be paid at time-and-a-half. If a caregiver later claims unpaid overtime, “not knowing” doesn’t protect families from liability.
The Financial Risk
▶ Unpaid overtime can trigger wage disputes, claims, penalties, and legal fees.
▶ California wage claims often become expensive quickly because penalties can stack.
Common Scenarios
Full-time care needs:
→ If your loved one needs 50–60 hours per week and you rely on one caregiver, you may owe 10–20 overtime hours weekly.
→ That overtime can erase the “savings” of a lower hourly rate.
Live-in or 24-hour care:
→ Flat daily or weekly rates can violate wage laws if overtime rules aren’t followed.
→ Agencies typically structure 24-hour coverage with compliant shift schedules (often requiring multiple caregivers).
Hidden Cost #4: Screening, Training, and Quality of Care
Selecting the right caregiver involves more than finding someone willing to work for a certain wage. There is real-time and expense involved in vetting qualifications, confirming identity and background, and ensuring ongoing quality of care.
Agency Advantages
Licensed agencies typically handle:
- Background checks (DOJ/FBI fingerprinting for licensed Home Care Organizations)
- Reference checks and credential verification
- Work authorization verification
- Ongoing oversight and performance monitoring
Your Responsibility When Hiring Privately
If you hire privately, all due diligence falls on you:
- Verifying references and employment history
- Paying for background checks
- Confirming training and certifications
- Evaluating performance over time
▶ Skipping screening to “save money” can create the highest cost of all—your loved one’s safety and your family’s peace of mind.
Training Considerations
Agencies often provide training in dementia care, safety, emergency procedures, and best practices—and they have systems for supervision and correction. Private hiring can work, but families may need to invest more time (and sometimes money) to ensure the quality and consistency of care.
Hidden Cost #5: Reliability, Backup Care, and Flexibility
Caregivers are human. People get sick, have emergencies, and take time off. One major advantage of agencies is built-in backup staffing—if your regular caregiver can’t come, the agency can often send a replacement quickly.
The Private Hire Challenge
→ If your caregiver calls out, you may be the one scrambling—taking time off work, finding last-minute coverage, or paying premium rates for emergency help.
→ If a caregiver quits unexpectedly, you may face gaps in care and the stress of rehiring.
Agency Benefits
✓ Backup caregivers are often available through the agency’s staff pool
✓ Scheduling changes can be handled without starting from scratch
✓ If someone leaves, the agency can usually replace them faster
That reliability and flexibility are part of what families pay for—and for many adult children juggling careers and responsibilities, it can be invaluable.
So, Is a Private Caregiver Really Cheaper?
When you add everything up, the gap between a private caregiver’s apparent cost and an agency’s cost often narrows considerably—and in some situations, the private route can become more expensive overall.
The Hidden Costs Recap
Here are the commonly overlooked costs families assume when hiring privately in California:
✓ Employer taxes (often an additional 10–15% of wages) plus payroll support costs
✓ Workers’ compensation premiums (or major liability if uninsured)
✓ Overtime pay after 9 hours/day or 45 hours/week in California (40 hours under federal law)
✓ Hiring costs (background checks, reference calls, time spent screening)
✓ Training and supervision (classes, monitoring, managing performance)
✓ Replacement/backup care (last-minute coverage costs or lost work time)
▶ Legal risk exposure (audits, wage claims, injury liability)—one mistake can cost thousands
Expert Perspective
Given these factors, many elder care experts recommend using reputable agencies unless a family is fully prepared to operate as a household employer. While agencies may cost more per hour, the extra dollars often cover insurance, compliance, oversight, and backup staffing—benefits that can prevent costly surprises.
For San Diego families, this matters even more because California labor laws are strict, and enforcement can be aggressive. With a licensed agency, you don’t have to manage payroll withholding, workers’ comp compliance, or overtime tracking—it’s handled for you. You also gain peace of mind knowing that caregivers are vetted and trained in accordance with state standards.
Making the Best Decision for Your Family
Care decisions often come down to balancing cost, safety, and peace of mind. If you’re an adult child trying to do right by your aging parent, the slightly higher hourly fee of an agency may be well worth removing the employer burden and legal risk from your shoulders.
The Bottom Line
A private caregiver is not automatically “cheaper” once you understand the hidden costs. For many families in San Diego and throughout California, choosing a reputable home care agency is often the safer—and sometimes more cost-effective—option when all factors are considered.
✓ Professional management
✓ Compliance with wage and tax laws
✓ Insured protection (workers’ comp + liability coverage)
✓ Vetted, trained caregivers
✓ Backup staffing and continuity of care
If you’re weighing your options, reach out to local resources or licensed agencies for guidance. A reputable agency should be transparent about what’s included in their rate—and help you understand the real-world costs and protections behind that number.
When it comes to in-home care, you truly get what you pay for. Investing in a professional agency may save you from paying a much higher price later, because your loved one’s safety and your peace of mind are worth it.
