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  • Ashley Geary, Esq.

Thinking of Hiring a Nanny? - Three Key Considerations

Updated: Jun 21

Having a child is one of the most joyous and exciting times in a person’s life. Unfortunately, it can also be one of the most stressful times. As if being a new parent is not hard enough, many families have the added stress of finding a childcare option that works for their situation. For some families, this means hiring a nanny or other domestic work (referred to throughout this article as “nanny”). Through the years, clients have contacted us requesting guidance on hiring a nanny privately, without the assistance of a pre-established nanny agency. Although hiring a nanny privately may seem straightforward, there are many aspects that must be taken into consideration before deciding to take this route. Below, we discuss what we view as the top three items to keep in mind when hiring a nanny:


Tax Considerations: When hiring a nanny, many people are inclined to do so “under the table” and not treat their nanny as an employee, thereby avoiding the payment of taxes related to such employment. However, if you have control over the specifics of your nanny’s position (e.g., the hours your nanny works, how your nanny does his/her job, etc. – as is the case for most nanny positions), then your nanny would most likely be categorized as an employee by the IRS. The penalties and fines at risk for mis-categorizing your nanny can be substantial. Therefore, we recommend treating and compensating your nanny as an employee. Although there is some paperwork that goes along with employment, there are many services that can streamline this process and ensure that you are managing payroll for your nanny properly. It is worth spending the money to obtain these services in order to avoid scrutiny and costly sanctions from the IRS.


Insurance Considerations: This is one area that clients are often surprised by. There are several types of insurance that you should consider obtaining when employing a nanny:

  • Homeowners/Renters Insurance: Depending on its limits and terms, homeowners or renters insurance policies can protect you from significant financial losses related to: (i) damage to and/or theft of your property by your nanny and (ii) injuries suffered by your nanny while on your property. However, because these policies typically have significant deductibles and inadequate coverage limits, it may be advisable to obtain an umbrella policy which you can use to supplement your liability coverage. That said, there are additional concerns with homeowners/renters insurance policies. In many states, injuries suffered by nannies while on duty are not covered under homeowners/renters insurance policies. Rather, the family-employer must obtain workers’ compensation policies to cover such incidents (discussed below). Further, in states where nannies can be covered under homeowners/renters insurance policies, the policy typically limits coverage to injuries suffered at the covered residence and would not apply if the nanny is injured while, for example, out running errands or at the park with the children.

  • Workers’ Compensation: Some states require you to obtain workers’ compensation insurance if you hire a nanny. If you are in one of those states, your homeowners/renters insurance will not cover costs related to your nanny’s injury. Even in states that do not require workers’ compensation insurance and where homeowners/renters insurance may provide some coverage, it is best practice to obtain workers’ compensation insurance for your nanny. The premiums for these policies are typically less than $1,000 per year and cover all medical and lost wage expenses that could stem from your nanny getting injured. Also, workers’ compensation insurance applies even if your nanny is injured while away from your home, so long as he/she is performing services related to his/her position when injured. For example, if your nanny takes your child to the park and trips and breaks his/her ankle while playing with your child, the workers’ compensation policy would likely cover this injury, whereas your homeowners/renters insurance likely would not.

  • Automobile Liability Insurance (“Car Insurance”): If you plan to have your nanny drive your car, you need to add your nanny to your car insurance policy. Depending on how often your nanny will be using your vehicle, you may only need to name him/her as an occasional driver, which in many cases will not raise your rates. You may also consider obtaining an umbrella policy for your car insurance. If your nanny causes an accident while in your vehicle, you could be held liable for damages to those involved and you want to have sufficient insurance to cover any such liability. If your nanny will be driving your children in his/her own vehicle, you want to ensure that he/she has car insurance with sufficient coverage, which may require an umbrella policy. You may consider paying or reimbursing your nanny for the cost of this coverage to ensure that it is maintained at an adequate level. You should require your nanny to include you and your spouse as “additional insureds” on the policy and require that the nanny provide you with proof of the policy from time to time, as well as notice in the event that any policy is reduced, suspended, or terminated.

Contractual Considerations: The question that we receive most often from our clients is whether they need a formal agreement with their nanny. We would recommend having a formal agreement in place. Without one, there are many important matters that go unaddressed, which could lead to issues with your nanny down the road. If you do opt for a contract with your nanny, you will want to make sure that the terms and duties are clear so that you and your nanny are on the same page regarding your expectations of the nanny’s services. Some web sites offer standard contracts that can be used for this purpose. However, many of those contracts contain vague terms that could lead to misunderstandings if not further clarified. As with any “standard” agreement, you want to review it carefully and tailor it to your specific needs. The following are key provisions you want to have within the agreement:

  • Work Schedule

  1. What time do you expect your nanny to arrive/begin work?

  2. Is he/she expected to work weekends and/or holidays?

  3. Is he/she expected to be “on-call” when you have to take call?

  • Duties

  1. What is expected of your nanny (e.g., cooking; cleaning; errands; giving children baths; caring for an infant vs. older children)?

  2. Do you expect your nanny to have any type of certification/training (e.g., CPR, First Aid, etc.)? If so, who will pay for this certification?

  • Pay

  1. How much and how frequently will you pay your nanny?

  2. Will you reimburse your nanny for any expenses (e.g., gas expenses, health insurance allowance, cell phone)?

  • Time off

  1. If your nanny is full-time, how much time can he/she take off? Is this time paid?

  2. How must time off be scheduled with you?

  • Exclusivity

  1. Are you sharing your nanny with another family?

  2. Is your nanny permitted to obtain employment with other families? If so, are there limits to this employment? For example, if you live in an apartment building, do you want your nanny working for others within the building?

  • Travel

  1. Is your nanny expected to drive your children around or pick them up from school each day? If so, whose vehicle will he/she be using? Who is responsible for the car insurance?

  2. Is your nanny permitted/expected to drive other children (i.e. carpool)?

  3. Do you expect your nanny to go on vacation with you? If so, will he/she receive additional pay? What will his/her hours be while there?

  • Termination

  1. How much, if any, notice is needed to terminate the relationship?

  2. Will you compensate the nanny for a certain period if you are the one who terminates the agreement?

All three of the issues discussed above are extremely important when hiring a nanny and should be taken very seriously. The added responsibilities and considerations that come along with hiring a nanny are a significant part of why many people choose to send their children to daycare or use an organized service to hire the nanny. By doing so, they eliminate some or most of those concerns.


If you have hired or plan to hire a nanny for your children and you want to ensure that you are taking the steps necessary to protect you from liability, please contact our firm.

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