Understanding the Co-Employer Model

The Co-Employer model is the most common way families in California's Self-Determination Program (SDP) hire their own caregivers. You choose and direct the people who work for you. The Financial Management Service (FMS) becomes a co-employer and carries the payroll, tax and insurance duties that come with having caregivers. This article explains how the split works, what it costs, and when another model fits better.

Your caregivers work for you, not for Sentinel Four. You are the managing employer: you choose who is hired, set the schedule and direct the work. Sentinel Four is the co-employer for payroll, taxes and workers' compensation, so the paperwork is handled and you stay in charge.

How the model works

In the Co-Employer model, the participant or their representative and the FMS both hold employer responsibilities. You are the day-to-day employer: you decide who works, when, and doing what. Sentinel Four is the employer for payroll and compliance purposes: we pay the wages, withhold and file the taxes, and carry workers' compensation. Neither side can do the other's job. You cannot run payroll, and we cannot pick or supervise your staff.

Who does what

You are responsible for

• Recruiting, interviewing and hiring caregivers who meet your needs.
• Setting schedules, duties and expectations.
• Approving hours worked and making sure clock-in and clock-out records reflect the care actually provided.
• Giving feedback and training, and ending employment when necessary.

Our guide to hiring your first caregiver under SDP walks through the first of these steps.

Sentinel Four is responsible for

• Processing payroll and paying your caregivers, every Monday, for the prior Monday-through-Sunday week.
• Withholding federal and state income tax, Social Security and Medicare from each check, paying the employer share, and filing with the IRS and the California Employment Development Department (EDD).
• Paying federal and state unemployment insurance and California's Employment Training Tax.
• Maintaining workers' compensation coverage for your caregivers. See workers' compensation for SDP caregivers.
• Tracking California paid sick leave.
• Collecting onboarding documents and wage notices, keeping employment records, and issuing W-2s at year end.
• Meeting Department of Developmental Services (DDS) requirements, including Electronic Visit Verification (EVV) for every shift.

What it costs

Wages are not the whole cost of an caregiver. On top of each hour of pay, an employer owes Social Security, Medicare, federal and state unemployment, the Employment Training Tax, workers' compensation and paid sick leave. Together these are called employer burden. In the Co-Employer model at Sentinel Four, burden is about 21% on top of wages. A caregiver paid $20 an hour costs roughly $23 to $25 an hour all-in. Your spending plan needs to cover wages plus burden, so build the line with that in mind. Employer burden explained breaks the percentage down item by item.

Who can be hired

You can hire people you already know and trust, including family friends and long-term caregivers. Two program rules apply as of 2026:

• A legally responsible person cannot be paid for services they would normally provide. That usually means a parent of a minor child or a spouse. A parent who is conservator of an adult child, or who holds power of attorney, is not "legally responsible" in this sense and may be paid for qualified services.
• Anyone giving direct personal care needs criminal background clearance before starting. Family members who live in the same home are exempt. The provider pays for the check, and the FMS directs the person to fingerprinting.

Check with your regional center on both points; practice varies.

When Co-Employer might not be the right fit

Some participants choose the Sole Employer model instead. In Sole Employer, you or your representative are the legal employer of record, and Sentinel Four acts as your payroll agent: timesheets, paychecks, tax filings and employment records. You may secure your own workers' compensation policy or use ours. Families often choose it when hiring skilled nursing or other specialized staff. Employer burden is lower in this model, about 15%, because some obligations sit with you rather than with the FMS.

If you do not plan to hire anyone and will use only vendors and agencies, the Bill Payer model is simpler still. Our models page compares all three.

How Sentinel Four handles this

• Co-Employer is service code 316; Sole Employer is code 317. We offer both, plus Bill Payer, and your case manager can walk through the differences before you decide.
• New caregivers complete onboarding documents and wage notices with us, are set up in ADP, and are directed to fingerprinting when a background check is required.
• Caregivers clock in and out in the AxisCare app on a personal phone. As of January 1, 2026 they receive a $2.50 per-pay-period reimbursement for that device use, shown as a separate non-taxable line on the pay stub.
• Payroll runs weekly. Hours from Monday through Sunday are paid on a Monday.
• Your portal shows every caregiver's hours, pay and the running balance on each spending plan line.