How to Pay Live-In Caregivers in Washington State

(Without Risking an L&I Nightmare)

If you operate an Adult Family Home (AFH) in Washington State, payroll for live-in caregivers is one of the most misunderstood — and risky — parts of running your business.

Many AFH owners do what they’ve seen others do: flat daily rates, “salary” caregivers, or netting room and board against pay.

The problem? Most of those approaches do not comply with Washington labor law.

This post walks through:

• What the law actually requires

• The correct way to pay live-in caregivers

• Why even post-tax room & board deductions are usually a bad idea

The Core Rule: Caregivers Are Hourly Employees

Under Washington’s Minimum Wage Act (RCW 49.46), caregivers are non-exempt hourly employees.

That means:

• Minimum wage applies

• Overtime applies

• Hours must be tracked

Living on-site does not change this.

❌ Common but illegal approaches

• “I pay $150 per day”

• “They’re salaried”

• “We just pay a flat monthly amount”

✅ Legal approach

• Pay an hourly wage

• Track all hours worked

• Pay overtime over 40 hours per week

Step 1: Set an Hourly Wage

• Washington minimum wage (2026): $17.13/hour

  • Seattle $21.30/hour

  • Vancouver $17.13/hour

  • Check your local areas minimum wage rates as it could differ from the state's wage.

Your hourly rate should be:

• Clearly stated in writing

• Applied consistently

• Paid for every hour worked

Step 2: Track All Hours Worked

Hours worked include:

• Direct resident care

• Cooking, cleaning, laundry

• Waiting time when the caregiver must remain available

Sleep time:

• Only excluded if it qualifies as bona fide sleep time

• In AFHs, sleep is often interrupted and therefore counted

Example: Maria works 10 hours per day, Monday–Friday → 50 hours for the week

Step 3: Calculate Gross Pay and Overtime

Washington overtime is 1.5× the regular rate for hours over 40 per week.

Example (Maria at $20/hour):

• 40 hours × $20 = $800

• 10 overtime hours × $30 = $300Gross pay = $1,100

Step 4: Withhold Required Payroll Taxes

Typical withholdings include:

• Federal income tax

• Social Security (6.2%)

• Medicare (1.45%)

• WA Paid Family & Medical Leave

• WA Cares Fund

Example:

• Gross pay: $1,100

• Taxes (approx.): $242

• Net pay: $858

At this point, payroll is complete and compliant.

Step 5: Handling Room & Board — Where Most AFHs Get It Wrong

Room and board is where payroll often goes off the rails.

Critical principle:

Room and board cannot be used to offset minimum wage or overtime obligations.Any housing arrangement must be voluntary, documented, and structured carefully.

There are two ways AFHs attempt to handle this.

Option A: Separate Room & Board Payment (RECOMMENDED)

This is the cleanest and safest approach.

How it works:

1. Pay the caregiver their full wages through payroll

2. The caregiver pays rent separately (for example, $600/month)

This payment is not part of payroll.

Paystub shows:

• Gross wages

• Taxes

• Net pay

Room & board is handled under a separate lodging agreement.

Why this is best:

• No minimum wage issues

• Clean payroll records

• Minimal L&I audit risk

• Easy to explain and defend

For most AFH owners, this is the only structure that consistently holds up under scrutiny.

Option B: Post-Tax Payroll Deduction (Legal, But Not Recommended)

Washington does allow voluntary, written wage deductions in limited circumstances.

However, post-tax deductions for room and board are still risky — especially in live-in AFH settings.

Example of a Post-Tax Deduction

Using Maria’s example:

• Gross pay: $1,100

• Taxes: $242

• Net pay: $858

AFH deducts room & board:

• Room & board deduction: $600

Final paycheck: $258

On paper, this may appear compliant — but in practice, it raises red flags.

Why Post-Tax Room & Board Deductions Are a Problem

Even when technically authorized, L&I often disallows these deductions if they determine:

• Housing primarily benefits the employer

• The caregiver had no realistic housing alternative

• The deduction leaves the caregiver with very little take-home pay

• Documentation is weak or inconsistent

In live-in AFH environments, these deductions are frequently challenged.

What owners expect: “It’s voluntary and in writing, so we’re fine.”

What often happens: L&I reclassifies the deduction as improper and orders repayment.

What Happens If L&I Disallows the Deduction

If a deduction is found improper, L&I can assess:

• Repayment of all deducted amounts

• Double damages

• Civil penalties

• Interest on unpaid wages

Example:

• $600/month × 12 months = $7,200

• Double damages = $14,400

• Plus penalties and interest

That’s from a single caregiver.

Why Salary Pay Makes This Worse

Many AFHs combine:

• Salaried caregivers

• No hour tracking

• Room & board deductions

This combination is one of the most common triggers for wage claims.

Caregivers almost never meet the legal test to be salaried-exempt in Washington. If audited, salaries are back-calculated into hourly wages — often revealing unpaid overtime.

The Bottom Line for AFH Owners

If you want to protect your business:

✔ Pay caregivers hourly

✔ Track all hours worked

✔ Pay overtime correctly

✔ Keep room & board separate from payroll whenever possible

This isn’t about being “extra careful.”It’s about avoiding problems that can quietly build for years and then explode.

Need Help Setting This Up Correctly?

Many AFH owners don’t realize there’s a problem until someone files a complaint.

If you want help reviewing your current setup or fixing it before that happens, this is exactly the type of work I help AFH owners with.

Doing it right from the start is always cheaper than fixing it later.