There isn’t a foolproof way for fully avoiding the legal pitfalls of nanny care. Nevertheless, many simple steps can and should be taken to minimize legal risks.
For parents using nanny care, these steps are as follows:
1. Use an easy-to-understand nanny contract that addresses all of the steps below.
2. Treat the nanny as an employee, not an independent contractor.
3. Pay the IRS the required Social Security and Medicare (together known as FICA) taxes, the federal unemployment tax (known as FUTA), and any required state unemployment taxes, unemployment insurance, and workers’ compensation insurance. For assistance, read the IRS Household Employer’s Tax Guide. If the tax issues are too confusing or time consuming, use a nanny tax service and/or accountant with expertise in household employees.
4. Set hourly and overtime rates of pay for the nanny, even if he or she is salaried. Be sure that the pay rate complies with federal and state minimum wage and overtime requirements.
5. Have a written weekly work schedule.
6. Track the nanny’s time on an hourly basis using time sheets.
7. Pay the nanny every two weeks, unless state law requires otherwise.
8. Have a written policy about holidays, vacation, and sick leave. If required by state law (such as in California), treat earned vacation time as wages (meaning, don’t take it away).
9. Have a clear written description of job duties and house rules.
10. Require the nanny to complete U.S Citizenship and Immigration Services Form I-9 (Employment Eligibility Verification) before starting work.
11. Obtain a Federal Employer Identification Number (EIN) from the IRS before the nanny begins work.
12. Conduct a background check before the nanny begins work. To conduct the check, have the nanny complete a consent form.
13. Have a clear written policy about termination (i.e., how the nanny might lose his or her job).
14. If the nanny will use his or her own vehicle for driving the children, have nanny use a milage log for accurate reimbursement.
15. Require the nanny to agree in writing to keep information about the family confidential.
16. Keep a copy of important records related to the nanny’s services.