Finding that perfect nanny for your child can be an overwhelming process in itself. Add in payroll, taxes and the idea of being a household employer for new parents and it gets to be daunting. Educated Nannies has teamed up with our experts at HomePay to make sure you have all the resources you need to hire a nanny, and take away some of that fear. Here are some great tips for employing a nanny legally!
Your Tax Responsibilities
As a household employer, you must withhold Social Security, Medicare and California state disability insurance taxes from your nanny’s paycheck each pay period if she earns $2,000 or more in a calendar year. Federal and state income taxes are optional to withhold, but we highly recommend it so your nanny doesn’t end up with a large tax burden or underpayment penalties at the end of the year.
Additionally, you’ll be required to pay the employer’s portion of Social Security and Medicare, as well as federal and California unemployment insurance taxes, and the California Employment Training Tax. The threshold for having to pay unemployment insurance taxes is $750 in a calendar quarter, so even if you hire a short-term nanny, you may be responsible for these taxes without having to pay Social Security or Medicare taxes.
The good news is, when you do all of this correctly, you’ll be eligible for tax breaks can offset a large portion of these taxes. Many families that use HomePay save more than $2,000 each year and we’re happy to help you do the same!
Hourly Pay & Overtime
According to the Fair Labor Standards Act (FLSA), your nanny is classified as a non-exempt worker. This means she must be paid on an hourly basis and receives overtime. Combining federal and California state law is a little tricky with determining when overtime is required, so hopefully we can help explain it:
- Nannies should be paid at least 1.5 times their regular hourly rate (time-and-a-half) for all hours worked over 40 in a workweek.
- California daily overtime law requires nannies to be paid overtime for all hours worked over 9 in a day.
- If the nanny is a live-in employee, overtime is required if they work more than 9 hours in a day and/or 45 hours in a 7-day workweek.
Note: There are additional overtime requirements for nannies that work 12 or more hours in a day or 6 or 7 consecutive days in a workweek. Please call HomePay at (888) 273-3356 for details if this employment situation arises for you.
Mandatory Paid Sick Time
Household employers in California are required to provide up to 3 days (24 hours) of paid sick time each year as long as their employee works at least 30 days. Sick time accrues at 1 hour for every 30 hours worked, but families can choose to offer the full amount upfront if they choose. Unused sick time can roll over to the next year, but families can cap their nanny’s total paid sick time to 48 hours. Families do not need to pay for unused sick time if the nanny is terminated and they can begin using their sick time 90 days after they begin working.
This all may seem like a lot of information to take in, but HomePay is here to help you make it easy to manage. We understand every family has different payroll, tax and HR needs and we’re happy to provide a personalized consultation so you feel comfortable paying your nanny on the books. Just give us a call at (888) 273-3356 or visit us online at www.myhomepay.com for answers to all your questions.
(photo credit : TWI Copy)