Elder Care by "Family" Member

My elderly mother, with dementia, lives with my sister, who works 3 days a week. My sister's granddaughter's mother, who has been living with my nephew for many years, sometimes stays with Mom when no one else is available. My sister pays her to do this but it is not on any schedule.

Some weeks it can be for several hours, others only a few or none. Is this a household employee or 1099 situation? I am wondering if there are any special circumstances for "family" doing family care?