Personal service contracts govern arrangements where individuals hire service providers for work in their homes or for direct personal assistance, including caregivers, housekeepers, personal assistants, home health aides, private tutors, or personal trainers. Unlike typical consumer transactions where you simply pay for a completed service, these agreements involve ongoing relationships where providers have access to your home, family, and private information. The personal nature of these services creates unique legal considerations around liability, privacy, tax obligations, and the critical distinction between independent contractor and employee classification that can trigger significant financial consequences if mishandled.
Many homeowners don’t realize that hiring someone to work regularly in their home can create employer obligations under federal and state law, regardless of how they structure payment or what they call the relationship. If you control when, where, and how the work is performed—telling a caregiver which hours to work, how to prepare meals, or what cleaning products to use—you’ve likely created an employment relationship requiring payroll tax withholding, workers’ compensation insurance, and compliance with minimum wage and overtime laws. The IRS and state agencies aggressively pursue homeowners who misclassify household employees as independent contractors, imposing back taxes, penalties, and interest that can amount to thousands of dollars. Even well-intentioned families have faced financial devastation after a household worker’s injury claim revealed years of unpaid employment taxes.
A properly drafted personal service contract clarifies the relationship structure and allocates responsibilities in ways that protect both parties. The agreement should specify whether the provider carries their own liability insurance or whether your homeowner’s policy needs adjustment to cover potential injuries or property damage. Privacy and confidentiality provisions become crucial when someone has access to personal information, family matters, and valuable property. The contract must address practical scenarios: what happens if the regular provider is sick, whether they can bring others onto your property, how to handle house keys and security codes, and termination procedures that comply with any applicable labor laws. For caregiving arrangements, the contract should detail specific duties, medical limitations, emergency procedures, and mandatory reporting obligations for suspected abuse or neglect.
Legal counsel can structure the relationship to minimize liability exposure while ensuring compliance with applicable laws—whether that means properly establishing an independent contractor relationship with appropriate documentation or acknowledging employee status and understanding the resulting obligations. An attorney can also include protective provisions often overlooked in informal arrangements: background check authorizations, driving record requirements for those transporting family members, intellectual property clauses for tutors or trainers creating custom materials, and dispute resolution procedures that avoid costly litigation. Given the trust required when inviting someone into your home and family life, professional drafting provides both legal protection and clear expectations that help preserve these important relationships.