Tyler Perry Fired His Aunt. Here's What Small Business Owners Should Know About Hiring Family

Tyler Perry is one of the richest people in entertainment. By his own account, he also fired his aunt.

On the July 20, 2025 episode of Kirk Franklin's podcast Den of Kings, Perry said his aunt kept calling him for money. He offered her a job instead. "I want to help you build this thing, not be welfare to you," he recalled telling her. She kept calling in and not showing up, so he let her go. "You want me to hand you the money but you don't want to work for it." ^{[1] [2]}

He described a second decision too. After his mother died in 2009, he said, he gave relatives he had been supporting 60 days' notice to become "gainfully employed," because "I'm not going to keep supporting you like this." According to Perry, they all got jobs. ^{[1] [2]}

Most small business owners will never have Perry's money. Almost all of them will have his problem. A cousin needs work. A brother-in-law is between jobs. A parent asks, "Can't you find something for him at the shop?" This paper looks at what Perry's story gets right, what the research says about mixing family, money and work, the tax and labor rules that apply when the employee is a relative, and a simple test to use before you say yes.

This paper reports what Perry said in a public interview, as covered by Complex and Black Enterprise. It makes no judgment about Perry or his family. Groundwork has no connection to Perry or the podcast.

What Perry actually did

Strip away the celebrity and the story contains three business decisions any owner can learn from.

1. He turned a handout into a job. Repeated requests for money had no end point. A job did: it came with work, a schedule and a paycheck tied to effort. Perry's own words draw the line between help that builds someone and help that replaces their effort. ^[1]

2. He held the job to a standard. The reason he gave for the firing was attendance: she wasn't coming in and kept calling in. ^[1] That is the kind of reason that holds up. It is observable, it would apply to anyone, and it doesn't depend on family history.

3. He gave notice and a deadline. Sixty days is not an ambush. It told relatives what was changing, why, and how long they had to adjust. Whether you're ending financial support or a job, notice is what makes a hard decision feel fair.

What the story doesn't show is just as useful. We don't know what the aunt's job was, whether expectations were written down, or what warnings came first. Those are exactly the details that decide whether firing a relative ends cleanly or splits a family. We cover them below.

What the research says

Family pressure to share money can starve a business

Economists have a blunt name for the pressure on successful owners to support relatives: a "kinship tax."

A 2024 study in The Economic Journal ran a lab experiment with 361 small-business owners in Kenya. About a third faced pressure to share income that was strong enough to change their business decisions, and the pressure rose with the owner's ability. Using an earlier cash-grant experiment, the study found that the only owners who invested the grants in their businesses were men who did not face that pressure. Under the author's assumptions, the kinship tax lowered total productivity among the firms studied by about a quarter. ^[3]

A study of small firms in Burkina Faso in the Journal of Comparative Economics reached a similar conclusion: when sharing with family feels more like forced redistribution than mutual insurance, successful owners are more likely to hold back profitable investment. ^[4]

These studies come from low-income countries, where family safety nets carry more weight than they do in the United States, so the size of the effect shouldn't be carried over directly. The mechanism travels well, though. Money that leaves the business to support relatives, as cash or as a paycheck for a job that doesn't need doing, is money that can't go into equipment, marketing or a cash cushion.

Treating relatives differently hurts the business

Research on family firms describes "bifurcation bias," the tendency to treat family employees differently from everyone else. A 2018 study in the Journal of Business Research examined how that bias and more professional people practices relate to performance, and linked the unequal treatment to weaker results. ^[5] Our paper Should You Hire a Family Member? covers this research in depth, along with a five-question decision framework. ^[12]

A fair process protects the relationship

A study of 996 fired and laid-off workers in Administrative Science Quarterly found that how people were treated at termination was among the strongest predictors of whether they filed wrongful-termination claims. ^[6] With a relative, the stakes go beyond a lawsuit. You will see this person at holidays. Our paper Fire Well explains the research and gives a five-step method, with a section on letting go of family and close friends. ^[13]

Gift or job? Decide before you say yes

Most family hiring trouble starts with one mix-up: a gift dressed up as a job. When the real goal is to help a relative, the "job" usually has no clear duties, no standard, and pay that has nothing to do with the work. Then the owner can't manage it, other employees resent it, and ending it feels like taking away charity.

Perry's story separates the two. So should you.

The Groundwork Gift-or-Job Test. Before you hire a relative, answer five questions honestly.

Five yeses: it's a job, so treat it like one. Any no: it's a gift, a loan, a referral to another employer, or a kind "not right now." All of those are legitimate ways to help family. None of them should go through your payroll.

For question 3, our guide How to Write a Job Description walks through it. For question 5, the free hiring cost calculator shows the true cost of a hire and how much work they need to bring in to cover it. The full break-even method for a first hire is in When Should a Small Business Hire Its First Employee? ^[11]

The money rules when the employee is family

Hiring a relative changes a few tax and labor rules. It doesn't change the most important one: the job has to be real.

Payroll taxes depend on who the relative is and how the business is set up

The IRS sets out special employment-tax rules for some family employees. ^[7]

The IRS family rules cover children, parents and spouses. Brothers, sisters, cousins, aunts, nieces and nephews aren't on that list, so they're treated like any other employee. ^[7]

Pay has to be reasonable, and you need the records to prove it

Paying a child or another relative is only deductible when the pay is for real work and is reasonable for that work. The Tax Court looks closely at family payroll, and two 2016 cases show why records matter. ^[8]

• No records: An attorney deducted roughly $8,000 to $10,500 a year in wages to her three children, all under nine. She issued no W-2s and kept no payroll records. The court couldn't tell what each child was paid, how many hours they worked or at what rate. It allowed $250 per child per year and disallowed the rest. (Fisher v. Commissioner, T.C. Memo. 2016-10.)
• Records, but unreasonable pay: A business with about $8.75 million in annual sales paid its four children for real work and issued W-2s. The court accepted most of the pay but disallowed large year-end bonuses, concluding that an unrelated employer would not have paid them. (McMinn v. Commissioner, T.C. Memo. 2016-136.)

The lesson for any family hire: keep a written job description, track hours, pay a rate you'd pay anyone for that work, run it through payroll, and issue a W-2.

Child labor rules have a parent exception, with limits

Federal child labor law generally sets 16 as the minimum age for most non-farm jobs, with limited work allowed at 14 and 15. It exempts parents employing their own children, and that exemption covers only the owner's own children, not nieces, nephews or other relatives (unless the owner is standing in place of a parent). ^{[9] [10]} The exemption does not cover manufacturing, mining or occupations the Department of Labor has declared hazardous. ^[9] State child labor laws can be stricter, so check yours.

This section is general information, not tax or legal advice. Confirm your situation with a CPA or tax professional before you put a relative on payroll.

When it isn't working: the Perry rule, done right

Perry's version took one sentence: she wasn't coming in, so he fired her. In a small business, the safer version takes a little more preparation, most of it done before the first day.

1. Write the standard down on day one. Hours, attendance, duties and what happens if they're missed, signed by the relative like any other employee. Attendance worked as Perry's reason because it's objective. Make yours objective too.
2. Warn once, clearly, in writing. "You've missed four shifts this month. The standard is no more than one unplanned absence. If it happens again, we'll end the job." Give a relative exactly what you'd give anyone else, no more and no less.
3. Name the two hats. Open the conversation with "I'm talking to you as the owner right now." Keep it to the job.
4. Give notice when you can. Perry's 60 days worked because it gave people time to adjust. When the issue is fit rather than misconduct, a defined end date is kinder than an abrupt exit and easier for the family to accept.
5. Agree on what the family hears. Decide together what you'll both say, so relatives don't hear a different version at the next gathering.
6. Follow the full method. Final pay, paperwork and the steps in between are in Fire Well. ^[13]

The same approach works when there is no job involved, and you're ending regular financial support for a relative. Tell them what's changing and why, give a clear date, and offer one concrete kind of help that builds instead of replaces: a reference, an introduction, help with a résumé.

Example: two ways to help a nephew

This example is hypothetical.

Dana owns a small bakery with five employees. Her sister asks her to give her 22-year-old nephew, Marcus, a job.

Version one. Dana adds Marcus at $15 an hour "to help out." There's no schedule, no listed duties, and no one he reports to besides Dana, who is too busy to notice when he's late. Within two months, two employees are covering his tasks and asking why the rules don't apply to him. Dana pays him in cash from the register to keep it simple, which means no payroll records and no deductible wage. Ending it means a fight with her sister.

Version two. Dana runs the Gift-or-Job Test. She does need a weekend counter and cleanup person, 16 hours a week. She would hire a stranger for that role at $15 an hour. She writes the job description, runs the cost through the hiring cost calculator, and puts Marcus on payroll with the same 90-day review as everyone else. On day one she tells him and her sister the same thing: "Same rules as everyone. If it doesn't work, we'll talk about it before it's a problem." When Marcus misses two Saturdays, there's a standard to point to, a written warning and a clear next step.

The relative is the same and the job is the same. The difference is whether it was set up as a gift or as a job.

The one-page family employee agreement

Before a relative's first day, put these on one page and have both of you sign it.

• Job title and duties (attach the job description)
• Schedule, hours and attendance standard, including how to call in and what counts as a no-show
• Pay rate, pay schedule and how hours are tracked, run through regular payroll
• Who they report to, if it isn't you
• Review date, 60 or 90 days out, just like any other new hire
• Same-rules statement: "All workplace policies apply exactly as they do to every other employee."
• How it ends: the warning process, and the notice either side will try to give
• Family firewall: "Work issues are discussed at work, with the owner, not at family events."

This page isn't a contract guaranteeing employment, and it doesn't change at-will status where that applies. It's a shared understanding put in writing before anyone's feelings are involved.

Groundwork's final assessment

Tyler Perry's story went viral because it sounds harsh: a billionaire fires his aunt. The business logic underneath it is sound. He separated help from employment, held a job to a real standard, and gave people notice before changing the deal.

The research points the same way. Pressure to support relatives can drain money a business needs to grow. Treating relatives differently weakens performance and morale. A fair, respectful process protects both the business and the relationship. And when the employee is family, tax rules reward owners who keep real records and penalize those who don't.

Hire a relative when the business needs the work, the pay fits the job, and you're willing to manage them like anyone else. Otherwise, help them some other way.

Put Groundwork to work for your business

Most family hiring problems start before day one, with a job that was never written down. Groundwork writes clear job descriptions that come with a free performance review form, builds simple written procedures so expectations are the same for everyone, and offers a Second Pair of Eyes review of a hard people decision before you make it. Every Groundwork project is fixed-price. Groundwork is not a law firm or a tax practice; for tax treatment of family wages, talk to a CPA, and for a termination with any red flags, talk to an employment attorney in your state.

Anticipated Questions

Isn't it cold to hold family to the same rules as everyone else?

It's the opposite. A relative held to no standard has no way to succeed and no way to prove they earned the job, and your other employees notice. Clear, equal rules are what let a family member be respected at work.

Can I pay my kids to lower my taxes?

Possibly, if the business is a sole proprietorship or a partnership owned only by you and your spouse, the child is under 18, the work is real and the pay is reasonable for it. The Tax Court has cut deductions where owners kept no records or paid more than the work was worth. Run it through payroll, keep timesheets, and confirm with a CPA first.

My relative asked for money, not a job. What should I do?

Run the Gift-or-Job Test anyway. If there's no real role, keep it personal: decide what you can afford to give from your own money, if anything, and keep the business out of it. If you're ending support you've been giving regularly, use Perry's approach: explain the change, give a clear date and offer help that builds, like a reference or an introduction.

What if I already hired a relative without any of this?

Start now. Write the job description, hold a short "reset" meeting to cover the standard and the review date, and from then on apply the same rules you apply to everyone else. It's awkward once. It's much harder to fix after a year of exceptions.

Is Groundwork affiliated with Tyler Perry or Den of Kings?

No. This paper reports public comments Perry made in an interview, as covered by news outlets, to illustrate a common small-business decision. Groundwork has no affiliation with Perry, his companies or the podcast.