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For a strong, lasting relationship, we recommend offering your nanny the same respect and stability you’d expect in any professional role. Standard benefits often include:

• Guaranteed hours (consistent pay even if you don’t need coverage some weeks)

• Overtime pay (for hours over 40 per week, as required by law)

• Paid time off (vacation days, sick days, and personal days)

• Paid holidays (major federal holidays, or those important to your family)

• Mileage reimbursement (if driving children in their own vehicle)

• Annual raises or bonuses (to reflect loyalty and performance)

• Health/wellness stipend (if possible, to support their wellbeing)

These benefits help create a professional, supportive environment—leading to longer retention and a happier relationship for everyone.

Yes—it’s a very big deal. Paying “under the table” may seem easier in the short term, but it creates serious risks for both families and nannies.

• Legal Risks for Families: If you don’t classify your nanny as a household employee and report wages properly, you could face IRS penalties, back taxes, interest, and even legal action. Families can also be held personally liable if the nanny files for unemployment, disability, or workers’ compensation and no taxes were paid in.

• Risks for Nannies: When nannies are paid off the books, they lose access to important protections like Social Security credits, unemployment benefits, workers’ comp coverage, and the ability to prove income for things like car loans, mortgages, or renting an apartment.

• Why W-2s Matter: Nannies are legally considered employees—not independent contractors—so the law requires families to issue a W-2, withhold taxes, and make the proper employer contributions. Doing this not only protects your nanny but also shields your family from costly legal and financial consequences.

• The Upside of Doing It Right: Paying legally gives everyone peace of mind. Your nanny earns verifiable income and benefits, and your family gets tax breaks like the Dependent Care FSA or the Child and Dependent Care Tax Credit, which can help offset costs.

In short: paying legally isn’t just about following the rules—it’s about protecting your nanny, your family, and your finances.

Workers’ compensation laws vary by state, but most families should check carefully because the rules depend on the number of hours worked, wages paid, and sometimes whether the nanny lives in the home.

• States that require workers’ comp for household employees (like nannies):

• California

• Colorado

• Connecticut

• District of Columbia (Washington, D.C.)

• Hawaii

• Illinois

• Kentucky

• Maryland

• Massachusetts

• Minnesota

• New Hampshire

• New Jersey

• New York

• Ohio

• Oregon

• Pennsylvania

• Washington

• Other states: Many others don’t require it by law for household employees, but families can choose to add it as extra protection. Some states (like Florida, Texas, and Virginia) only require coverage if the nanny works a certain number of hours or you employ multiple workers.

Why it matters: Even if not legally required, workers’ comp is strongly recommended. Without it, a family could be held personally responsible for medical bills and lost wages if a nanny is injured on the job.

We will help with this process!

Workers’ compensation is required in many states for household employees. To set it up, you’ll usually purchase a household workers’ comp policy through your homeowners’ insurance provider or a state insurance fund. Some families also use a nanny payroll service, which can help add workers’ comp to your policy and handle compliance automatically.