Domestic Employer Rights and Wrongs

Domestic Employer Rights and Wrongs

Congratulations, you have hired a nanny!  A nanny can be an enriching relationship in your child’s life. In addition, a good nanny can be a valuable member of that village it takes to raise a child. But employing a nanny doesn’t come without responsibility. You are now a domestic employer. All good things require some effort.

A good nanny is gold. Of course you will want to retain employment of your valued nanny. It is important to start things off on the right foot. Make sure you have your major bases covered. 

One of the major basics to employee retainment is offering a competitive pay rate that is comparable to the going rate in your area. The nanny’s qualifications, education, and experience should be factored into this decision, as well as the duties of the job. Will it be strictly basic child care? Or will you require additional duties such as laundry, transportation, or light cleaning? Discussing the expectations from the start is key.

Although not federally mandated, compensation packages with benefits, such as accrual of paid time off (PTO) and certain paid holidays, are standard in the industry. Five to fifteen PTO days, for sick, vacation, or personal days, is the average range per year. The number you land on will be part of your negotiations. Other benefits can include things such as health insurance, meals, bonuses, and transportation reimbursement.

Another mutual benefit is if the nanny wishes to incorporate his or her own child into care—sometimes referred to as a “nanny mom.” There are many advantages and also some challenges included with this scenario. If the care provider wishes to bring their own child, they may be willing to offer a discounted rate for this benefit. Childcare costs per household can range from 15% to 65% of household income, so saving this expense is a valuable perk for your nanny.

A major industry standard is guaranteeing a certain number of hours per week. It is not uncommon for a family’s schedule to fluctuate. Consider yourself lucky if your nanny is flexible enough to accommodate this. However, guaranteeing a set (or minimum) number of hours per week is only fair so the nanny can anticipate his or her income. If your childcare needs fall below the minimum hours-per-week commitment, the nanny still gets paid for those hours. This applies when the domestic employer goes on vacation and does not require childcare. Unless it is during the time the nanny had previously chosen to use paid days off, the employer should still be compensating the nanny when they are away.  

At the bare minimum, you must understand state and federal regulations that apply to you as a domestic employer.

  1. A domestic employer must adhere to local and federal minimum wage laws.
  2. Providing your nanny with a W-2. If your nanny is over 18 years of age and you pay more than $1,900 a year, this is a requirement. There is a common misconception that you can provide a 1099 instead of a W-2. Failure to provide a W-2 can lead to penalty and back taxes.
  3. Workman’s Compensation and/or insurance to cover injury on your property. Although regulatory bodies vary from state to state on whether or not this is mandatory, it is advisable to protect both you and the nanny. Your insurance company can refuse to pay for an injury on your property if the person on your property was there to receive compensation. This includes even occasional babysitters. The rider is typically not expensive. Call your insurance company today! Insurance companies will not advertise this necessity (allowing them to deny more claims!). For nanny shares, be sure to discuss this unique situation with your insurance provider if you will be hosting another child in your home.
  4. Compliance with overtime laws, which require employees to be paid at time-and-a-half for hours exceeding 40 hours per week. In some states domestic employers must factor overtime on a daily basis instead of weekly, so find out what laws apply in your location.

Once you come to an agreement on expectations, duties, compensation, and benefits, it is absolutely critical that you record all of this in a work agreement. Nanny contract templates are readily available through Via The Village and online. Having a contract in place will decrease the risk of misunderstanding and be handy tool to refer back to, because it is nearly impossible to recall everything you discussed. If agreements are not recorded, there is a risk for memory to produce discrepancies that can deteriorate your relationship.

The cost of childcare can certainly add up for for families. So don’t forget to seek benefits for yourself, the employer! Be sure to speak with a tax professional about writing off dependent- care expenses and/or utilize dependent- care reimbursement benefits your employer may offer. And of course, consider an option to really help curb cost, Nanny Sharing: An Innovative Option!
For more details on any of these topics, you can refer to Nanny Employer Handbook, put out by the International Nanny Association.