How to Properly Pay a Nanny for an Overnight Stay

Compensating a nanny for overnight stays involves specific guidelines for managing sleep time and triggers various tax and legal obligations for household employers. Understanding these requirements ensures fair compensation for the nanny and adherence to legal standards.

Calculating Nanny Compensation for Overnight Stays

Calculating gross pay for an overnight nanny requires considering various compensation methods and labor law interpretations. Flat fees or daily rates must adequately cover all hours worked at or above minimum wage, including overtime. Many families pay an hourly rate for awake hours combined with a flat or reduced rate for sleeping hours, or a comprehensive flat rate for the entire overnight period.

Federal labor laws provide specific guidance on “sleep time” for employees working shifts of 24 hours or more. If a nanny works a shift lasting 24 hours or longer, up to eight hours of uninterrupted sleep time may be excluded from compensable hours. This exclusion requires the nanny’s agreement and adequate sleeping facilities. If the nanny’s sleep is interrupted for duties, that time must be paid. For shifts less than 24 hours, all hours the nanny is required to be on premises and not completely relieved of duties must be compensated, even if they are allowed to sleep.

When a nanny accompanies a family on an overnight trip, the compensation structure can vary. Nannies often receive a flat nightly rate, typically ranging from $75 to $400, as an inconvenience fee for being away from their own home. If the nanny is on duty during the night while traveling, those hours must be compensated at their regular rate. Overtime rules may apply if total weekly hours exceed 40. Some families also provide a stipend in addition to regular pay for overnight stays.

Meals and lodging provided during an overnight stay can also factor into compensation. If meals are provided for the employer’s benefit, they may be excludable from the nanny’s taxable wages. If lodging is provided on the employer’s premises for the employer’s convenience, and the nanny is required to accept it as a condition of employment, its value might be excludable from wages. These provisions require careful documentation for proper tax treatment.

Navigating Tax and Labor Law Requirements

Household employers must navigate federal and state tax and labor law obligations. Federal tax responsibilities include Social Security and Medicare taxes (FICA), shared between the employer and employee. For 2025, if wages paid to a household employee reach or exceed an annual threshold of $2,800, the employer must withhold the employee’s FICA share and pay their own matching share.

Employers may also be subject to the Federal Unemployment Tax Act (FUTA) if they pay cash wages of $1,000 or more in any calendar quarter during the current or preceding year. FUTA taxes contribute to state unemployment funds, and employers receive a credit for state unemployment taxes paid. Additionally, household employers are responsible for withholding federal income tax from the nanny’s wages, based on the information provided on the employee’s Form W-4.

State-level obligations often mirror federal requirements, encompassing State Unemployment Tax Act (SUTA) taxes and state income tax withholding. SUTA taxes are paid by the employer to fund state unemployment benefits, with specific rates and wage bases varying by state. Many states also require employers to withhold state income tax from employee wages.

The Fair Labor Standards Act (FLSA) sets federal minimum wage and overtime standards for domestic employees, including nannies. Nannies are classified as non-exempt employees, meaning they must be paid at least the federal minimum wage for all hours worked and overtime at one-and-a-half times their regular rate for hours exceeding 40 in a workweek. While the FLSA allows for excluding up to eight hours of sleep time in certain 24-hour shifts, any hours worked during that sleep period must be paid. Some states have stricter rules requiring compensation for all hours on duty during overnight stays.

Workers’ compensation insurance is an important consideration for household employers. While not universally mandated in every state, many states require this coverage, particularly if an employee works a certain number of hours per week or earns above a specific threshold. This insurance provides wage replacement and medical benefits to employees injured in the course of employment. Securing workers’ compensation insurance is often advisable to mitigate risks.

Establishing Payroll and Record-Keeping Systems

Setting up a payroll system is important for household employers to ensure compliance and accurate compensation for their nannies. Employers can manage payroll independently or utilize dedicated payroll services. Independent management requires understanding tax and labor laws, while payroll services streamline calculations, withholdings, and filings.

A fundamental requirement for any household employer is obtaining an Employer Identification Number (EIN) from the IRS. This number serves as the employer’s tax ID for reporting wages and taxes. The EIN can be obtained online through the IRS website. Without an EIN, employers cannot fulfill federal tax obligations.

Upon hiring a nanny, several essential documents must be completed and maintained. Form I-9, Employment Eligibility Verification, confirms the nanny’s legal eligibility to work in the United States. Form W-4, Employee’s Withholding Certificate, allows the nanny to specify their income tax withholding preferences.

Ongoing record-keeping is important for household employers. Accurate records of hours worked, wages paid, and taxes withheld must be maintained. This includes detailed timesheets showing the nanny’s arrival and departure times, particularly for overnight stays. Employers should also keep records of all tax payments made and tax forms filed. These records should be kept for at least three years.