Disclaimer: This post is intended to act as a resource and is in no way a legal guide. Please do your own research and consult appropriate legal and tax professionals when necessary.
Hiring a nanny 101
Finding quality care for your child is one of the most important (and nerve wracking) tasks for a parent. Between visiting daycares and interviewing nannies, it can all feel very overwhelming. I’ve been a nanny and I’ve hired nannies. I’ve been a part of nanny-shares gone well, and have learned a thing or two by dynamics gone weird.
If you are thinking about going the nanny route, here are a few considerations:
- A nanny is considered by the IRS to be a household employee. That means she is a W2 employee of your family, not a 1099 independent contractor.
- As an employer, you will be responsible for withholding and paying taxes. You need to factor in extra costs above her hourly rate or annual salary.
- As an employer, you will need to consider what your nanny’s overall compensation package will be: will you offer any benefits and/or paid time off or sick time?
- Consider drafting an employment contract to address some basic questions up front.
- Will you hire a nanny for your family alone or participate in a nanny share?
What is a nanny share?
A nanny share can take many forms, but most commonly it is when two (or more) families share the services and cost of one nanny. Often, the nanny is caring for the children of both families simultaneously in one or the other home. In this setup, your nanny is the W2 employee of both your family and the other family. Be aware that if more than 4 children are being cared for at one time, it is by definition an “in-home daycare” in Pennsylvania, and you will need to follow appropriate code and licensing.
Good things to think about when hiring a nanny (this list is certainly not exhaustive):
- Will you pay her per hour or will she be salaried? What is the rate?
- What is the payment schedule and how will you pay her?
- What hours does she work?
- If she is full time, will you offer paid vacation? Paid sick? How much?
- What are her job responsibilities exactly?
- What happens when you go on vacation and don’t need her services for a week? Will you pay her anyway? (If she is full time we suggest you do, since she’s counting on this income).
- Under normal circumstances (when no one is in danger) how much notice will you give your nanny if you decide to end the contract? How much notice would you like her to give?
If participating in a nanny share, consider:
- Where will care take place? Will it be at one family’s home all of the time or will you rotate? Will both families pay the same amount even if one is hosting?
- Does your homeowners insurance cover any accidents in your home?
- When does the nanny get paid and how?
- When the nanny calls out sick, what happens?
- Do both families agree to pay (or not pay) the nanny if she calls out/takes vacation?
- If one family calls out (sick, vacation, grandparents in town, etc) are they still expected to pay for the hours?
- How will you handle food? Each pack food for your own child, each take a day, etc?
- Are there allergies to be aware of?
- How much lead time must each family give when exiting the nanny share agreement?
- If the nanny has a concern, how would you like her to handle it?
- In Philadelphia in 2018, you would be hard pressed to find a qualified nanny for under $15/hour for one child. This equates to $31,200 annually. Of course, plenty ask for more.
- Generally, you can expect to add $3 for each additional child. ie $15/1-child $18/2-children $21/3-children
- If you have a full time nanny, it is standard to give some paid time off.
- If you have a full time nanny, it is standard to pay her for her time even when the grandparents decide to show up and take your child for the week. She is counting on this income.
- In general, if you expect your nanny to do work outside of that which is directly related to your child/ren, you should pay her more for her time. ie if she is cooking the family dinner, doing family laundry, cleaning your house.
For many of parents it is difficult to put on the hat of employer, especially when it comes to the rather intimate relationship of having someone in your home caring for your child. Very likely your family will become good friends with your nanny, but that doesn’t mean the employment relationship should be too casual. Remember, this is her job, she depends on this income, and her job satisfaction (since she’s caring for your baby) should be top priority for you. Pay her on time, pay her the proper amount, and communicate effectively. The better you treat your nanny, the more likely she is to stick around. We certainly don’t want a disgruntled employee caring for our children.
For more information on hiring a nanny, a platform to search for a nanny, and a system to manage all the payroll and tax paperwork, check out care.com/homepay.