Consumer-directed modes of financing and delivering home- and community-based support services permit consumers--as opposed to medical or social work professionals--to exercise greater control over the services they receive. These modes allow consumers a broader choice of the providers who can render these services and afford the option of being the employer of record of their support service workers. The programs are popular with consumers, and the number of states that have implemented them has grown significantly over the past decade. However, with increased choice and control come increased responsibilities arising from a myriad of state and federal statutes and regulations governing the employer-employee relationship. As the employer of record in many of these programs, the consumer may be responsible for a broad range of tasks, including (1) recruiting, hiring, and training service workers, (2) defining workers' duties and work schedules, (3) supervising workers as to how specific tasks are to be performed, (4) managing payroll, and (5) disciplining and discharging workers as necessary.
Consumers enrolled in consumer-directed support service programs report that managing employment taxes and preparing and issuing payroll checks is one of the most daunting tasks they perform as employer of record and is the task with which they would most like assistance. Initially, state program administrators and consumers attempted to reduce the employer-related burdens associated with these programs by classifying support service workers as independent contractors. This approach failed because the Internal Revenue Service and the U.S. Department of Labor view most support service workers as household employees. The employer of such workers must pay them and report employment and other taxes associated with such employment in accordance with IRS and Department of Labor rules and regulations. Because of these difficulties, fiscal intermediaries of various kinds have emerged in the marketplace over the past decade to assist individuals enrolled in consumer-directed support service programs.