Hiring a full-time nanny is like hiring any other employee. When you hire a nanny, you’re considered a household employer in most cases, which means you have certain responsibilities.

Nannies are more than babysitters—for many families a nanny is an essential member of the household who provides support as a child grows and develops. Laying out rules and expectations in a contract can help you protect yourself and your employee and prevent future misunderstandings.

What to Include in Your Contract

No detail is too small to include in your contract. At a minimum, include the following:

• Thorough explanation of childcare duties and housekeeping duties (e.g., cooking, cleaning, errands)
• House rules (e.g., procedures for answering phone, front door, etc.)
• Work hours
• Wages and pay schedule
• Benefits (e.g., heath insurance, paid holidays, paid time off)
• Information about overtime, evening, or weekend hours
• Procedures for calling out sick or for emergencies
• Information about probation period after employment
• Information about performance expectations and periodic reviews

All states in the U.S. are “at-will,” which means an employee can be terminated or quit without notice at any time for any reason, as long as it doesn’t violate discrimination and other laws. Some states have exceptions, though. Learn about your state’s laws to avoid problems down the line or speak with an attorney.

Drawing Up the Contract

You can write a contract from scratch, but there are plenty of good templates online that can help guide you in preparing a comprehensive nanny contract.

Be specific about your situation and consider adding a clause about revisiting the contract with your nanny at some future date. Also consider having an attorney review the contract.

If you have a major life change (like having another baby), you may need to amend or rewrite the contract; any time you change the contract, you and your nanny should both initial and date a new copy.

Filing to Become an Employer

If you’re planning on hiring a nanny and you’re a first-time household employer, you’ll need to do several things, including:

• Apply for an Employer Identification Number (EIN). This gives you a specific tax number (like a Social Security number) for dealing with the IRS and other agencies.
• Register new employees with your state. Refer to your state’s government website for more information.
• Obtain an I-9 Employment Eligibility Verification form. This is used to verify the eligibility and identity of your nanny.
• File a W-4 form. This form helps you determine how much tax is to be withheld from your nanny’s salary. Use it if you and your nanny agree to withhold income taxes. Learn more about employment taxes here.

As an employer, you’ll need to track and record the following each pay period:

• Wages paid (cash and non-cash)
• Federal income tax withheld
• Social Security and Medicare tax withheld
• State employment taxes withheld

You are required to keep tax records for at least 4 years after the taxes were reported/paid along with employment tax forms and supporting documents.

Also consider things like carrying an umbrella liability insurance policy, especially if your nanny will drive your car(s). And find out if your state requires you to carry workers’ compensation insurance.

If you hire a nanny, you may be eligible for the federal child-care credit, which could save you thousands each year. You may also be eligible to use a dependent care Flexible Spending Account (FSA) to pay child-care expenses.

When Is a Nanny Not an Employee?

The government generally thinks of household staff as employees, not independent contractors. This is true even for nannies who work part-time and don’t live with you. The IRS makes this determination based on one primary principle: control.

In nearly all cases it’s the parent/family decision-maker who has control over the nanny’s schedule and the duties they’re required to perform. The parent also has the ability to call in for back-up care if the nanny is unable to work on a particular day.

If, on the other hand, a nanny dictates when they’re available to work, has specific procedures for how they’ll do their job, and has a network of contacts to fill in for them if they’re unable to report to work, this person could be classified as an independent contractor. But this situation is rare.

Hiring “Under the Table”

In the past, hiring a nanny “under the table” (paying someone in cash and not reporting it to the IRS) was viewed as normal and even acceptable, but times have changed. Failing to report employees and pay taxes is against the law, and it could land you in legal and financial trouble.

It pays to do things the right way. Your nanny will be working in your home with your family and may have access to your personal financial and other information. Doing things by the book and providing full benefits—like health insurance and paid time off—will help you find and retain the best.

Get Expert Help Hiring Household Staff

Hiring a nanny is an involved, complex process. If you’re feeling overwhelmed about the undertaking, you’re not alone.

Staffing at Tiffanie’s can help. We’re an established household staffing agency that specializes in finding reputable live-in nannies, celebrity nannies, and part-time nannies for clients throughout the country.

We use a rigorous screening process to carefully select qualified candidates, and we nurture you through the entire process of screening, interviewing, and hiring your perfect candidate—it’s how we’ve earned a reputation as one of the most trusted names in the household staffing industry.

Learn more about our process, then contact our domestic staffing agency at 866-484-5550 to find your ideal nanny.