What exactly is a House Cleaning Referral Agency?
Referral agencies are just as the name implies. They are agencies that refer “Independent Contractors” to customers for different services. One of the most popular services for referral agencies is House Cleaning. Referral agencies are contacted by customers looking for house cleaners. Referral agencies are basically the middle man. They will find you individual cleaners to clean your home.
Referral agencies are NOT the actual employers of these individuals. Referral agencies cannot direct, train or control these individual’s work in any way. Referral agencies also don’t pay employment taxes on these individuals. Customer’s MAY be liable for paying employment taxes if they pay wages over certain tax thresholds while the individual works within their home. Referral agencies are also NOT responsible for paying worker’s compensation, liability insurance or bonding.
By not paying taxes or insurance; referral agencies can typically under price employer based cleaning companies. Several consumers think this is excellent. They can save money. Everybody wants a bargain right? Well, let’s take a closer look. A few individuals that agree to work for referral agencies have never had any former cleaning training. They may not have individual insurance or liability insurance. What happens if they get hurt in your home? Is the referral agency going to pay? NO! What happens if the individual breaks your tiffany lamp and the individual does not have insurance? Who pays, the “independent contractor? Good luck trying to collect that debt. Let’s go back to the referral agency. Are they going to pay for your lamp? No way! Remember, they only “referred” an individual to you! They will tell you they have no liability.
Often enough the difference between a referral agency and an employer based company is in quality, dependability, professionalism and liability. You may pay a little more for these qualities, but you will sleep well knowing you are using a licensed, bonded and comprehensively insured and professional company.
Referral agencies legally must disclose the fact that they are referral agencies. They must disclose this fact, both verbally and in writing. They must also let the customer know that they may be liable for payment of employment taxes including unemployment insurance and social security for this “Independent Contractor”.
Other problems usually encountered with referral agencies, is the situation where the customer is unhappy with the cleaning the “independent contractor” performs. Since the referral agency cannot legally train or direct the work of the “Independent Contractor” – the referral agencies only solution is to send another “Independent Contractor.” This is the cycle a customer routinely falls into when using referral agencies.
Employer based companies most often put their employees through a thorough training program. The employee then works alongside experienced workers to gain more expertise on all aspects of cleaning. When you hire a person from a referral agency you have no idea if they have had any training. Remember, the agency is NOT allowed to train, direct or control these individuals. If they do in anyway, they become employers and are responsible for paying all the taxes mentioned above.
The next time you call for an estimate on cleaning you may want to ask if the company carries worker’s compensation or better yet just ask the questioný “Are you a referral agency?” Remember when calling for estimates from cleaning companies, you may not always be comparing apples with apples and oranges with oranges. Make an informed decision and hopefully you will find a competent professional cleaning company to put a shine to your home. Please find laws on referral agencies operating in California below.
CIVIL CODE OF CALIFORNIA
(b) An employment agency is not the employer of a domestic worker
for whom it procures, offers, refers, provides, or attempts to
provide work, if all of the following factors characterize the nature
of the relationship between the employment agency and the domestic
worker for whom the agency procures, offers, refers, provides, or
attempts to provide domestic work:
(1) There is a signed contract or agreement between the employment
agency and the domestic worker that contains, at a minimum,
provisions that specify all of the following:
(A) That the employment agency shall assist the domestic worker in
(B) How the employment agency’s referral fee shall be paid.
(C) That the domestic worker is free to sign an agreement with
other employment agencies and to perform domestic work for persons
not referred by the employment agency.
(2) The domestic worker informs the employment agency of any
restrictions on hours, location, conditions, or type of work he or
she will accept and the domestic worker is free to select or reject
any work opportunity procured, offered, referred, or provided by the
(3) The domestic worker is free to renegotiate with the person
hiring him or her the amount proposed to be paid for the work.
(4) The domestic worker does not receive any training from the
employment agency with respect to the performance of domestic work.
However, an employment agency may provide a voluntary orientation
session in which the relationship between the employment agency and
the domestic worker, including the employment agency’s administrative
and operating procedures, and the provisions of the contract or
agreement between the employment agency and the domestic worker are
(5) The domestic worker performs domestic work without any
direction, control, or supervision exercised by the employment agency
with respect to the manner and means of performing the domestic
work. An employment agency shall not be deemed to be exercising
direction, control, or supervision when it takes any of the following
(A) Informs the domestic worker about the services to be provided
and the conditions of work specified by the person seeking to hire a
(B) Contacts the person who has hired the domestic worker to
determine whether that person is satisfied with the agency’s referral
(C) Informs the domestic worker of the time during which new
referrals are available.
(D) Requests the domestic worker to inform the employment agency
if the domestic worker is unable to perform the work accepted.
(6) The employment agency does not provide tools, supplies, or
equipment necessary to perform the domestic work.
(7) The domestic worker is not obligated to pay the employment
agency’s referral fee, and the employment agency is not obligated to
pay the domestic worker if the person for whom the services were
performed fails or refuses to pay for the domestic work.
(8) Payments for domestic services are made directly to either the
domestic worker or to the employment agency. Payments made directly
to the employment agency shall be deposited into a trust account
until payment can be made to the domestic worker.
(9) The relationship between a domestic worker and the person for
whom the domestic worker performs services may only be terminated by
either of those parties and not by the employment agency that
referred the domestic worker. However, an employment agency may
decline to make additional referrals to a particular domestic worker,
and the domestic worker may decline to accept a particular referral.
(c) The fee charged by an employment agency for its services shall
be reasonable, negotiable, and based on a fixed percentage of the
(d) An employment agency referring a domestic worker to a job
shall inform that domestic worker, in writing, on or before the
signing of the contract pursuant to paragraph (1) of subdivision (b),
that the domestic worker may be obligated to obtain business permits
or licenses, where required by any state or local law, ordinance, or
regulation, and that he or she is not eligible for unemployment
insurance, state disability insurance, social security, or workers’
compensation benefits through an employment agency complying with
subdivision (b). The employment agency referring a domestic worker
shall also inform that domestic worker, if the domestic worker is
self-employed, that he or she is required to pay self-employment tax,
state tax, and federal income taxes.
(e) An employment agency referring a domestic worker to a job
shall verify the worker’s legal status or authorization to work prior
to providing referral services in accordance with procedures
established under federal law.
(f) An employment agency referring a domestic worker to a job
shall orally communicate to the person seeking domestic services the
disclosure set forth below prior to the referral of the domestic
worker the following disclosure statement:
“(Name of agency) is not the employer of the domestic worker it
referred to you. Depending on your arrangement with the domestic
worker, you may have employer responsibilities.”
Within three business days after the employment agency refers a
domestic worker to the person seeking domestic services, the
following statement printed in not less than 10-point type shall be
mailed to the person seeking domestic services:
“(Name of agency) is not the employer of the domestic worker it
referred to you. The domestic worker may be your employee or an
independent contractor depending on the relationship you have with
him or her. If you direct and control the manner and means by which
the domestic worker performs his or her work you may have employer
responsibilities, including employment taxes and workers’
compensation, under state and federal law. For additional
information contact your local Employment Development Department and
the Internal Revenue Service.”
(g) An employment agency referring a domestic worker to a job
shall not specify that a worker is self-employed or an independent
contractor in any notice, advertisement, or brochure provided to
either the worker or the customer.
(h) Every employment agency referring a domestic worker to a job
and who is not the employer of the domestic worker being referred,
shall in any paid telephone directory advertisement or any other
promotional literature or advertising distributed or placed by such
an employment agency, on or after January 1, 1995, insert the
following statement, in no less than 6-point type which shall be in
print which contrasts with the background of the advertisement so as
to be easily legible:
“(Name of agency) is a referral agency.”
(i) An employment agency may not refer, in its advertising,
soliciting, or other presentments to the public, to any bond required
to be filed pursuant to this chapter.
(j) An employment agency may not refer, in its advertising,
soliciting, or other presentments to the public, to any licensure
acquired by the agency.
(k) Any violation of this section with the intent to directly or indirectly mislead the public on the nature of services provided by an employment agency shall constitute unfair competition which includes any unlawful, unfair, or fraudulent business acts or practices and unfair, deceptive, untrue, or misleading advertising. Any person or entity that engages in unfair competition shall be liable for a civil penalty not to exceed two thousand five hundred