Hiring a nanny can be both exciting and nerve-wracking, especially for ultra-busy, sleep-deprived families. Often, the obsession with finding the perfect caregiver causes families to overlook important employment details.

The Mistake

A Virginia family began searching for a nanny to care for their new bundle of joy. After an emotionally-draining 6-week quest to find the ideal nanny, they hastily agreed — verbally — on a work schedule and hourly rate. The nanny started work the next day without any kind of written agreement in place.

The Law

In some jurisdictions, a basic employment agreement is legally required. Whether required or not, we highly recommend that families use a placement agency or an attorney who can facilitate a comprehensive contract between family and nanny.

The discipline of drafting detailed job responsibilities, house rules, emergency procedures, work schedule, vacation/sick time procedures, compensation, pay frequency, communication/review procedures, etc. radically reduces problems and misunderstandings. It also tends to lengthen relationships because it makes the employee feel like a valued professional. Finally, it can be an important and cost-effective means of arbitrating any family/nanny issues.

The Mess

Within a few weeks, the honeymoon was over:
The family had trouble hiding frustration with the nanny’s housekeeping habits. She was tidying up the baby’s room and kitchen as well as cleaning toys and baby clothes. But the family had expectations of the nanny doing the family’s laundry and light housekeeping.
The nanny resented not getting paid for Labor Day. She needed the money and had assumed that she’d get paid for major holidays.
When the nanny got her first pay check, she was confused by the tax withholding’s. She thought the agreed-upon amount would be her “take-home” pay.

The Outcome

The family talked to friends and did some online research into the typical duties of nannies. They quickly realized that nanny job descriptions vary wildly and that they had done a poor job of articulating their desires at the beginning of the search process.

Similarly, although the family had done some research on household employer tax and legal obligations, they had not discussed the compensation and benefits offer at the appropriate level of detail for their nanny.

Despite the rocky start, the family really liked the way the nanny took care of the baby so they made a considerable effort to keep her. They created an employment agreement and sat down with her to discuss all the “relationship details” they should have discussed a month earlier.

Unfortunately, the nanny took another job shortly after their meeting. She did not feel valued or respected and opted for a fresh start with another couple.

The family hired their next nanny through one of our agency partners. The agency used a thorough job description process to focus the search on nannies who met the family’s expectations. After a comprehensive vetting process, the agency held the family’s hand through an employment agreement that left no room for misinterpretation or confusion. It’s been almost 18 months and the relationship is going strong.

How the Whole Thing Could Have Been Avoided

When searching for household help, busy families are tempted to take short cuts. Aside from being pressed for time, it can feel somewhat awkward to have a formal contractual agreement with someone with whom there is such a personal relationship.

However, in our experience, the formal work agreement is the single-best predictor of the long-term success of the relationship. Without one, the relationship almost always seems to be rife with misunderstandings and resentment. With one, the relationship enjoys clear direction and increased professionalism.

We encourage families to retain a reputable placement agency that can guide them on employment agreements and other important aspects of due diligence involved with household employment. It dramatically enhances the odds of an endearing and enduring employment relationship.

If you have additional questions about this or any other aspect of household employment tax and labor law, visit them 

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The final rule will:

• Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
• Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
• Strengthen overtime protections for salaried workers already entitled to overtime.
• Provide greater clarity for workers and employers.

Nannies, and other domestic workers, are non-exempt and protected under The Fair Labor Standards Act.  Therefore, a nanny who works over 40 hours in a week is required to earn time and a half for those additional hours.

For example, lets say a nanny works 45 hours a week and earns $617.50.   Her hourly salary is $13/hr for the first 40 hours and $19.50 for the additional 5 hours worked that week.

Watch the video for more information on nanny overtime pay and the

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Talking about taxes can often seem overwhelming. Luckily, °µÍøAV can refer you to professionals that can help. We recommend using for all your household employment needs.

By definition, a nanny working in the home of a family is an employee of the family (even if the job is temporary, permanent, part-time, or full-time). The nanny is NOT an independent contractor. The ‘employee’ classification is determined by the nature of the work performed—not by how much the nanny is paid or the amount of time she is with the family. The IRS has ruled definitively that caregivers are employees of the families for whom they work.

If you are only employing a nanny for a few months in the summer or for very part-time hours during the school year, you may not think you need to withhold taxes from your nanny’s wages, but you are most, likely mistaken.

If you pay your nanny more than $1,900 (2014) in a calendar year, you, as an employer, must meet the household employment tax withholding and reporting obligations. You are required to withhold payroll taxes from your nanny’s wages and then report and pay those taxes to the tax agencies quarterly. Before your nanny starts, have her fill out a w-4. This form helps determines how much will be withheld from your nanny’s paycheck. At the end of the year, your nanny should be sent a Form W-2 detailing her wages, as well as the taxes that she has pre-paid throughout the year.

Filing the necessary papers and to pay your nanny legally may seem like a hassle, but it is illegal for you—the employer—to fail to withhold taxes and file employment tax returns. Our friends at Breedlove and Associates, will take the stress out of paying your nanny legally and will educate you and help you take advantage of the tax breaks you may enjoy by doing so. Visit their website to learn how.

We hope you find this helpful. Please call °µÍøAV for Kids St. Louis 314-725-5660 or °µÍøAV for Kids Miami 305-256-5905 for your child care needs.

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