Also as an employer, you have various legal responsibilities of which you need to be aware. You may be required to withhold certain payroll taxes, sometimes called nanny taxes, from the nanny's paycheck, and pay them over to the Internal Revenue Service. You may be liable for state taxes as well. There also are state and federal statutes that apply to the business relationship between you and the nanny, perhaps in much the same way that your own workplace may be regulated.
Please keep in mind that this article is meant only as an overview of your potential tax and legal liabilities. Consult a tax expert or lawyer for specific advice on what you are or are not required to file or pay if you hire an in-home childcare provider.
The Employment Agreement
Once you have settled on your preferred nanny candidate, it is advisable to formalize your professional relationship with an employment agreement. Unlike the application, this should be a comprehensive document, with as many terms of your agreement memorialized in writing as possible. The main reason to have a contract with specific terms is to help prevent your nanny from accusing you of breach of contract if you decide to terminate the employment relationship. A discussion of some of the more important parts of the agreement follows.
Be sure to specify the people who are to be bound by the agreement. This means the nanny, you, and your spouse (if applicable). Include the addresses of all parties.
Responsibilities of the Childcare Provider/Job Description
Describe what tasks you want the nanny to perform relative to the job of providing childcare. (Additional housework is discussed in a later section.) Be thorough in including the general categories of activities you wish the nanny to undertake, but leave flexibility in the particulars. For instance, require that the nanny facilitate learning, but do not limit the methods by which she can accomplish this. Provide examples of educational activities, but state that the list is not limited to those that are specified.
Start Date/Contract Term
Differentiate between the date the contract is entered and the date that employment is to start. If they are two separate dates, both should be included in the contract. The agreement date is the date that the employment relationship is entered. The start date indicates when the nanny's care-giving responsibilities and the parents' duty to pay the nanny begin. Also, provide either an end date or a specific time period for the life of the agreement. A one- or two-year term is fairly typical.
Wages should be very specific. The pay rate should be expressed in hourly, daily, or weekly terms. If the nanny may be expected to provide babysitting services above and beyond her normal work hours, overtime pay should be designated in writing. If possible, explain in the contract the circumstances under which overtime work would be requestedfor example, the amount of advance notice that the nanny could expect before being called upon to stay late at work.
Employment taxes in the nanny situation are discussed in this article. For purposes of the nanny agreement, you will want to set out which party is responsible for remitting the necessary taxes from the nanny's pay to the proper state or federal agency. Certain taxes must be withheld by the employer while others may be paid by either party on behalf of the nanny. The latter type of tax can be withheld and paid over by the employer only if the nanny agrees.