Nannies and Care in a Family's Own Home

Care given in a child's own home is usually outside state child care licensing. What takes its place is employment law, and it arrives whether or not anyone has thought about it.

The pattern catches families out because the two systems feel like alternatives. A nursery is licensed, inspected and regulated, and a nanny is not, so the arrangement looks lighter. It is not lighter. It is different. Instead of a licensing agency there is a payroll obligation, a wage floor, an overtime rule and a tax return, and instead of an inspector there is the family itself deciding what safe practice looks like.

Why care at home falls outside licensing

State child care schemes are built around care provided to children away from their own homes, usually for compensation, on a regular basis, and to children who are not related to the provider. Care given in the child's own home misses on the first element, and almost every state writes an exemption to say so.

Federal conditions on child care funding recognize the same category, allowing states to exempt children who receive care in their own homes from certain requirements provided no other unrelated children are cared for there. The qualifier at the end is the one that matters when arrangements grow. Once other families' children join, the home stops being one child's own home for the rest of them, and the licensing question reopens.

The employment position, which is not optional

Domestic service employment means services of a household nature performed in or about a private home, and the regulation's own list of examples includes babysitters and nannies alongside cooks, housekeepers and gardeners. That places a nanny squarely within federal wage law.

Domestic service employees must receive at least the federal minimum wage. Those who work more than forty hours in a workweek for the same employer must be paid overtime at one and a half times the regular rate, unless they reside in the employer's household. A live-in employee has an overtime exemption but not a minimum wage exemption. State law frequently goes further, with a higher wage floor, daily overtime, or overtime for live-in workers, and where it does the more generous rule applies.

Tax, records and the paperwork that follows

A household employer has its own tax obligations, covering social security and Medicare taxes above a wage threshold, federal unemployment tax above a quarterly threshold, and the reporting that goes with them. Income tax withholding is generally not required for household employees unless both parties agree to it, in which case it must be done properly.

Paying cash without records is the common shortcut and the expensive one. It leaves the worker without earnings credited toward social security or unemployment benefits, and it leaves the family exposed on back taxes, penalties and interest, and often on unpaid overtime, since the burden of proving hours worked falls on an employer with no records. It also makes any later dispute unresolvable, because there is nothing to point at.

Two further obligations catch families by surprise. Workers compensation coverage for household employees is required in a number of states above a stated hours or wage threshold, and a homeowner or renter policy may or may not include it. And unemployment insurance registration with the state is usually separate from the federal filing. Both are cheap to set up at the start of an arrangement and awkward to fix once someone has been working for a year.

How the arrangements compare

Safety when nobody is inspecting

The absence of licensing removes the external check, not the underlying risks. The subjects a licensed program must address are a reasonable checklist for a household to work through: infectious disease and immunization, safe sleep, medication with written consent, food allergy response, premises hazards including water and traffic, emergency planning, first aid and resuscitation training, and recognizing and reporting child abuse.

Two of those are worth insisting on. Current first aid and resuscitation certification, because a nanny is alone with the child and nobody else will call the ambulance. And a written medication and emergency authorization, so that treatment is not delayed by a question about permission.

Written expectations do the rest of the work. Sleep arrangements for an infant, screen limits, who may collect the child, whether visitors are allowed in the house, what happens in a power failure or a lockout, and how the day is recorded are all things a licensed program would have policies for. A household that writes them down once removes most of the disagreements that otherwise arrive in month four.

Screening is the family's own responsibility here, since the state runs no check. The framework used in licensed care is a useful model, described under the child abuse registry check, and driving obligations are the same ones covered under transporting children safely and lawfully. Where an arrangement grows beyond one family, the licensing question in which child care arrangements need a license becomes live again, and it is much easier to answer before the second family joins than after.

One last point about endings. Domestic employment is usually at will, but a written agreement setting notice on both sides, and stating what happens to accrued time off, prevents the most common source of bad feeling. Families rarely plan for the end of an arrangement when they are relieved to have found someone. It is the cheapest paragraph in the whole document.