Family Legal Advice

10 Legal Facts Families Must Know

While the nanny and employer relationship may feel informal, it’s not. Nanny employers are legal household employers and as such, are subject to many of the same employment laws that govern big corporations. Be sure to familiarize yourself with the nanny employer legal facts that may apply to you.

1. Nannies are not independent contractors.

The Internal Revenue Services views nannies as employees of the parents for whom they work if they are over the age of 18 and earn more that $1800 per year (2012).For this reason, you must provide your nanny with a W-2 form, rather than a 1099 form.

2. You must verify your nanny’s eligibility to legally accept work in the United States prior to hiring.

As part of the hiring process, it is a nanny employer’s responsibility to verify that the nanny is legally able to accept work in the United States. This is done using the I-9 form from the United States Citizen and Immigration Services.

3. Some interview questions are illegal.

While you may be interested in knowing if your nanny is married, has children or is planning to have children, asking those questions is illegal according to the Fair Labor Standards Act. To get the information you are looking for, instead ask if the nanny is able to travel and work overtime or if she has any commitments that would prevent her doing so.

4. You are responsible for withholding taxes.

As a nanny employer, you are responsible for paying the “Nanny Tax.” The nanny tax is the employer’s portion of FICA (Medicare and Social Security), Federal Unemployment Tax (FUTA), State Unemployment Tax (SUTA) and in some states disability as well as other taxes. The employer taxes can amount to about 10% of the nanny’s gross wages. There are tax credits available to offset these costs. Nanny employers are also required to withhold the nanny’s portion of FICA, Federal Income Tax, State Income Tax and any other required state taxes.

5. A written work agreement articulates your nanny’s position.

Having an executed written work agreement can help protect you from false claims. Outlining duties, responsibilities, length of the employment agreement, salary and tax responsibilities and other pertinent job information can protect you should questions arise about how you agreed to handle taxes, salary and payroll.

6. You are responsible for paying your nanny at least minimum wage, even for salaried nannies.

Nannies are non-exempt employees and must be paid at least minimum wage for every hour worked. If your nanny works overtime, her salary must be broken down into a base hourly salary and an overtime hourly salary. The base hourly salary must be equal to or greater than minimum wage.

7. Live-out nannies and some live-in nannies are entitled to overtime.

Live-out nannies who work more than 40 hours per week must be paid overtime for each hour worked over 40 within a 7 day period at the rate of 1.5 times the nanny’s base hourly salary. Some states like California have stricter rules and require nanny employers to pay overtime if the nanny works more than 8 hours per day.

For live-in nannies, room and board are provided in addition, not in exchange for child care services. Live-in nannies must be paid for each hour that they work. In some states, including Massachusetts and New York, for example, nannies are also entitled to overtime pay after a set number or hours (usually 40 or 44).

8. Paying your nanny through your business payroll is illegal.

Childcare is not viewed by the Internal Revenue Service as a business expense. Therefore personal, not business tax deductions must be taken for nanny employers.

9. Giving your nanny time off instead of overtime pay is illegal.

Offering your nanny comp time off, rather than paying her for the overtime hours she worked, is not legal. Under federal law, comp time can only be given to government or legal employees. 

10. Your auto insurance may not cover your nanny.

If you have given your nanny a vehicle to use during her working hours to transport your children, be sure to add her to your policy as an insured driver. If she’ll be using her own car to transport your children, be sure she has the proper insurance in place that will cover her while using her car for business.