So, You're Hiring a Nanny?

Here's How to Be Sure You're within the Law
Regardless of how your nanny refers to herself, how you define her status in an employment contract, or whether she is paid hourly or is salaried, it is the law that determines who is and who is not an "employee" - and thus subject to legal and tax requirements.

Many people believe that as long as a nanny doesn’t turn her employer in herself, the employer will never get caught hiring someone illegally. Recent history, and the criminal courts, are littered with people laboring under this misconception.

By Robert E. King, Esq.

You've done all your research and you've decided that of all your childcare options, hiring a nanny is the best choice for your family. So you ask around and find a reputable nanny agency, go through an extensive screening and interviewing process to select just the perfect person to care for your child, and you hire her. All of a sudden, you're a household employer - with all the legal, tax and insurance implications that brings. Now what?

Nannies As Employees

"Yikes," you may be thinking. "That sounds complicated. Can't I just call my nanny an independent contractor and make life a lot easier?"

In most cases, the answer is "no."

The question of whether a nanny is an "employee" or an "independent contractor" is one that can sometimes have gray areas, but in almost all cases under both federal and state law, nannies are "employees."

There are several legal criteria used to determine a nanny's employment status:

  • Economic Reality Test - Is this the nanny's only job? Even if it's not, does she rely on this specific job for a considerable amount of her income? Is her financial livelihood entirely or largely dependent on this job? If the answer is "yes" to any of these questions, then she's almost certainly an employee.

  • Amount of Control - Another factor in whether a person is an employee centers on the issue of control. If you exercise control over how the person does his or her job in your own home - and in almost every case you would exercise such control over how your nanny interacts with your child - then you likely have an employee, not an independent contractor.

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