There are many routes to go down to find your perfect nanny, and like your nanny is a unique asset to your family that reflects your household’s needs, so too will be the journey to find them.
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There are many routes to go down to find your perfect nanny, and like your nanny is a unique asset to your family that reflects your household’s needs, so too will be the journey to find them.
Hiring a nanny “on the books” in Los Angeles means more than just paying their hourly wage. Many first-time nanny employers are surprised to find a variety of additional costs and legal requirements that significantly increase the true cost of employing a nanny. From the difference between gross and net pay to payroll taxes, overtime, and insurance, the expenses can add up quickly. This post will explain these hidden costs in detail – using real numbers – and outline the relevant California and federal laws (as of 2025) so you can budget and comply with the law confidently.
One of the first potential miscommunications when hiring a nanny is gross pay vs. net pay. Gross pay is the nanny’s earnings before taxes and withholdings, while net pay is their take-home pay after all deductions. Many nannies (especially those who have been paid “off the books” before) tend to think in terms of net take-home pay, whereas employers need to budget based on gross pay plus taxes. It’s crucial to clarify this during salary negotiations. If you and your nanny discuss a wage without specifying gross or net, you could end up with very different expectations.
Real Numbers Example: Let’s say you agree to pay your nanny $500 per week gross. Out of that $500, you (as the employer) will withhold the employee’s taxes – Social Security, Medicare, federal and state income tax – typically around $105 (this can vary based on withholding allowances). That leaves your nanny with roughly $395 net in take-home pay on a $500 gross paycheck. In addition, you must pay your own employer taxes on top of the $500, roughly another $63 in this example. In total, your $500 gross wage costs you about $563, and the nanny’s net pay is about $395.
Now imagine the nanny had asked for $500 net per week as their take-home pay. In that case, you would need to “gross-up” their pay. You’d end up paying about $645 gross to result in a $500 net after withholding taxes, and then add roughly $81 of employer taxes on top. Your total cost would be about $726 so that the nanny still receives $500 net. Compared to the earlier scenario, that’s an extra ~$163 per week to deliver the same take-home pay! This dramatic difference is why it’s vital to distinguish gross vs. net in your work agreement. As HomeWork Solutions notes, a net pay agreement means the employer is taking on all the employee’s tax burden – including income taxes – which greatly increases the family’s cost. Always state the agreed gross hourly wage in the contract to avoid confusion.
When you pay a nanny legally, you become a household employer and assume several tax obligations often called the “nanny taxes.” In California and the U.S., these include:
Social Security and Medicare (FICA) Taxes: You must pay 7.65% of your nanny’s gross wages as the employer share of FICA (6.2% for Social Security + 1.45% for Medicare). Your nanny also owes 7.65% which is typically withheld from their pay. (If you don’t withhold it, you still have to remit their portion, effectively paying it for them.) For example, if your nanny’s gross pay is $800 in a week, your FICA contribution is about $61.20. Over a year of full-time work, this is a significant expense.
Federal Unemployment Tax (FUTA): You pay federal unemployment tax on the first $7,000 of the nanny’s wages each year. The effective FUTA rate is usually 0.6% (after credits) for California employers. This comes out to a maximum of $42 per year per household employee. (Without the state credit, FUTA is 6%, but nearly all CA employers get the credit by paying state unemployment.)
California State Unemployment Insurance (SUI) and Employment Training Tax (ETT): California requires you to pay state unemployment tax on the first $7,000 of wages per employee as well. The new employer SUI rate is 3.4% on that wage base, which is up to $238 annually per employee (3.4% of $7,000). There’s also a tiny Employment Training Tax of 0.1% on the same wage base (up to $7). In total, California state payroll taxes will be roughly $245 per year for a full-year nanny (until you reach $7,000 in wages; after that, SUI/ETT contributions stop for the year).
Income Tax Withholding: Unlike FICA and unemployment, withholding federal and state income taxes from the nanny’s pay is optional for household employers – but it’s highly recommended. Most families do withhold income taxes so the nanny doesn’t face a large tax bill later. The amounts will depend on the nanny’s W-4 (filing status, allowances, etc.). For planning purposes, you can estimate perhaps 10-15% of gross pay for federal income tax and a few percent for California income tax, to be withheld from the employee’s pay. (These don’t cost you extra money, but they do reduce the nanny’s net paycheck.)
Tax Thresholds: Note that these nanny tax obligations kick in at relatively low thresholds. If you pay your nanny $2,800 or more in a calendar year (2025 threshold), you are required to pay Social Security and Medicare taxes and issue a W-2. (This threshold is adjusted annually for inflation; it was $2,700 for 2024.) Similarly, if you pay $1,000 or more in any calendar quarter, you must pay FUTA unemployment taxes. Practically speaking, any regular nanny working even part-time will exceed these thresholds – for instance, $150/week crosses $2,800 in just 19 weeks. In short, if you’re employing a nanny in Los Angeles beyond a very casual occasional babysitter, you will be responsible for all these payroll taxes.
Additional California Taxes: California also requires employees to pay Disability Insurance (SDI) and its Paid Family Leave program via payroll deduction. As a household employer, you should withhold 1.0% (in 2025, up to the annual wage cap) from the nanny’s pay for CA SDI, though this doesn’t cost you extra aside from administrative effort. Also be aware of California’s income tax withholding schedules – if you withhold state income tax, you may need to remit it semi-weekly or monthly once amounts are over certain thresholds. A good payroll service can handle these filings for you.
Bottom Line: In total, your share of payroll taxes will typically add approximately 10-12% on top of your nanny’s gross wages. (If your nanny’s wages are higher, the percentage might be a bit lower because unemployment taxes cap out.) For example, GTM Payroll notes that most families pay around 9-12% of wages in employer taxes. So if you pay a nanny $40,000 in gross wages, budget an extra ~$4,000+ in taxes. Later, we’ll see concrete case studies with these breakdowns.
Another “hidden” cost – often overlooked by new household employers – is workers’ compensation insurance for your nanny. In California, you are legally required to have a workers’ comp policy for your household employee in almost all cases. The only exception is if the person worked less than 52 hours and earned less than $100 in the 90 days before an injury – which would only apply to extremely occasional help. If your nanny is regular (even part-time), you must carry workers’ comp.
Workers’ compensation covers medical expenses and a portion of wages if your nanny gets injured or sick on the job. It protects both the worker and you (the employer) from the huge costs of workplace injuries. In fact, if you don’t have coverage and your nanny gets hurt while working, you could be liable for all their medical bills and lost wages, and face fines or lawsuits. Given the high risks, compliance is important.
Cost of Workers’ Comp: The cost of a policy for a nanny in California can vary. Fortunately, many homeowners insurance companies allow you to add a household employee endorsement to your home insurance. Often, this is the easiest and cheapest route. Some Los Angeles families report adding a rider for as little as $80-$100 per year through their homeowner’s policy. If your insurer doesn’t offer that, you may need a standalone workers’ comp policy. Standalone policies might cost on the order of a few hundred dollars per year. One source estimates about $600-$800 per year for a typical household workers’ comp policy. The premium usually depends on the nanny’s payroll and the insurer’s rate for the classification (nannies are considered domestic workers, a relatively low-risk category). Given the range, you’ll want to get a quote – but expect at least a few hundred dollars annually for this coverage. It’s a good idea to factor this into your budget from the start.
California law makes obtaining this insurance fairly straightforward. As noted, check with your homeowner’s insurance first – most will add the required coverage for a nominal fee. If not, California’s state compensation insurance fund or private agencies can issue a policy. Do not skip this – not only is it legally required, but it’s also your safety net against potentially devastating injury costs.
Overtime can be a significant cost if your nanny works long hours. Both federal and California laws govern domestic worker overtime, and California has some unique rules. Here’s what Los Angeles employers need to know:
Federal Overtime (FLSA): Under the Fair Labor Standards Act, a domestic employee who lives out (i.e. your nanny goes home each night) is classified as a non-exempt hourly worker. This means they are entitled to overtime pay (1.5 times the hourly rate) for any hours over 40 in a workweek. You cannot avoid this by paying a salary – you must track hours and pay overtime for weekly hours above 40. (Live-in domestic workers have a different federal standard – the FLSA’s “live-in” exemption – but California overrides that, as we’ll see.)
California Overtime (Domestic Worker Bill of Rights): California law adds an overtime requirement for domestic workers, particularly personal attendants (which includes most nannies). In California, a nanny who is a personal attendant must receive overtime pay for any hours over 9 in a day, or over 45 in a week. Personal attendants are those who spend at least 80% of their time caring for a child (or other person in the home) – which covers almost all nannies. Essentially, California guarantees daily overtime after 9 hours, and weekly overtime after 45 hours for personal attendants.
Which rule applies – 40 or 45 hours? There’s an interplay between federal and state law here. California’s 45-hour weekly threshold is actually more lenient than federal law for live-out nannies. Since federal law requires OT after 40 hours, you will owe overtime after 40 hours in any week regardless. The stricter law (federal, in this case) governs because it’s more favorable to the employee. In practical terms: if your nanny is live-out, you should pay overtime for hours >40/week (due to federal law) and for any day over 9 hours (due to state law). The 45-hour CA threshold mainly comes into play for live-in nannies: a live-in personal attendant in CA gets OT after 9 hours/day or 45/week (since federal law doesn’t require OT for live-ins, California’s 45-hour rule then becomes the standard for them).
Daily Overtime: If your nanny works a long day, California’s rule means the 10th hour and beyond in a single day must be paid at 1.5x. For example, if they work a 10-hour day, that 10th hour is overtime (even if they don’t exceed 40 that week). This is unique to a few states like CA – federal law has no daily overtime, only weekly.
Double Time: California generally mandates double-time pay (2x rate) for hours beyond 12 in a day (and beyond 8 on the seventh consecutive day) for many workers. However, personal attendants are exempt from California’s double-time requirement in most cases. The Domestic Worker Bill of Rights law did not grant double-time to personal attendants; it only specifies overtime at 1.5x. (If your nanny does a lot of non-childcare household work and isn’t considered a personal attendant, then the standard Wage Order 15 rules would apply: overtime after 8 hours and double-time after 12 hours in a day. But that situation is uncommon for a nanny – it would mean they spend more than 20% of their time on housekeeping or other duties.)
In summary, for a typical live-out nanny in Los Angeles: pay overtime for any hours over 9 in one day or over 40 in a week. Overtime hours must be paid at 1.5 times the regular hourly rate. Always keep a time log; you cannot circumvent overtime by paying a flat salary or “daily rate.” (GTM Payroll reminds employers that household employees must be paid hourly with overtime – you can’t just agree on a flat weekly salary to cover 50 hours, for example.) If your nanny’s schedule regularly exceeds these hour limits, this premium pay will noticeably increase your costs.
Overtime Pay Example: Suppose you pay your nanny $20/hour base rate. If they work 50 hours in a week, that’s 10 hours of overtime. Those 10 OT hours must be paid at $30/hour (1.5x $20). So the week’s pay would be 40 hours × $20 + 10 hours × $30 = $800 + $300 = $1,100. Had you not accounted for OT, you might think 50 hours at $20 is $1,000 – but legally you owe an extra $100 in this scenario. Multiply that by a month or a year, and it’s substantial.
Legally employing a nanny in L.A. also means you need to comply with general labor laws that cover domestic workers:
Minimum Wage: Nannies must be paid at least the highest applicable minimum wage for the hours they work. California’s state minimum wage as of January 1, 2025 is $16.50 per hour for all employers. Many cities in California have higher local minimums. Los Angeles city, for example, adjusts its minimum wage each July 1; on July 1, 2025, the Los Angeles City minimum wage is $17.87 per hour. (Unincorporated LA County is similar, at $17.81 in 2025.) In practice, most nannies earn above these rates (experienced nannies in L.A. often earn $20-30/hour), but you must ensure at no point does your nanny’s hourly pay fall below the local minimum. This can matter if, say, you provide room and board to a live-in – there are specific credits/allowances for that, but generally you cannot deduct below minimum wage without careful compliance.
Paid Sick Leave: California law requires you to provide paid sick leave to your nanny. As of 2024, the state’s Paid Sick Leave law mandates a minimum of 5 days (40 hours) of paid sick leave per year for employees. Nannies qualify just like other workers (so long as they work at least 30 days for you in a year). Your nanny will accrue at least 1 hour of sick time for every 30 hours worked, and you must allow them to use up to 40 hours a year, or more if you offer it. California increased this from the old 3-day requirement, so make sure you’re using the updated 5-day rule.
Los Angeles has its own sick leave ordinance as well, which is even more generous. In L.A. City, employers must allow employees to accrue up to 48 hours of sick leave per year, and an employee’s use of paid sick leave can be capped at 48 hours (6 days) annually. (The city also requires allowing carryover of at least 72 hours if accrual is used.) In simpler terms, if you’re in the City of Los Angeles, plan on providing at least 6 days of paid sick leave per year. If your nanny doesn’t use it all, unused sick time carries over (up to the cap) to the next year, though you don’t have to pay out unused sick leave upon termination. Make sure you document sick time accrual and usage in your payroll records.
Rest and Meal Breaks: California’s normal labor laws require meal and rest breaks (e.g. a 30-minute meal break for shifts over 5 hours, etc.), but personal attendants are exempt from some of these requirements under Wage Order 15. You are not legally required to provide off-duty meal breaks to a personal attendant nanny in the same way as a commercial employer would. That said, it’s good practice to ensure your nanny can take meal breaks or rest as needed, especially during long shifts, for basic fairness and to maintain a good working relationship. If your nanny is not a personal attendant (does substantial housekeeping), then regular meal break rules could apply – but again, most nannies primarily care for children and thus fall under the personal attendant category.
Timekeeping and Wage Statements: Even for a household employee, California law (Labor Code) requires that you provide an itemized wage statement (pay stub) each pay period showing hours worked, gross pay, deductions, net pay, etc. If you use a payroll service, they will handle this. You should also have given your nanny the “Labor Code 2810.5” Wage Theft Prevention Act notice at hire, outlining the pay rate, overtime rate, regular payday, etc., and note your workers’ comp carrier. (This notice is required for all California non-exempt employees, including domestic workers.) Keeping compliant records protects you in case of any disputes.
Other Benefits: Standard benefits like holidays or vacation pay are not legally mandated for nannies in California. Those are optional perks you can negotiate, but not required by law. However, if you do provide paid vacation, note that California treats earned vacation as wages – any accrued but unused vacation must be paid out if the employment ends. This is something to keep in mind if you choose to offer, say, two weeks of paid vacation per year; track it properly.
Nanny as Employee, Not Contractor: Remember, a nanny is your employee, not an independent contractor. You control how they care for your children, their schedule, etc., which by law means they’re an employee. You cannot 1099 your nanny or treat them as a contractor – you must do payroll, withhold taxes, and follow employment laws. Misclassification can lead to penalties.
Now that we’ve covered the obligations, let’s look at a few concrete case studies to illustrate the full financial picture of different nanny scenarios in Los Angeles.
Every family’s situation is different. You might hire a part-time nanny or a full-time nanny working overtime. You might agree on a higher hourly wage for fewer hours, or vice versa. Below are a few scenarios with cost breakdowns to show the all-in costs to you as the employer. In each case, we’ll assume the nanny is single with standard tax withholdings (no special exemptions), and we’ll include employer taxes, workers’ comp, and other obligations we discussed. These examples assume the family handles payroll legally and the nanny is classified as an employee (which they should be).
(These simple numbers are to understand the various rates that exist, these dollar values are below what our nannies are looking to be paid per hour – see our Honest House Promise)
Note: These case studies use 2025 tax rates (Social Security 6.2%, Medicare 1.45%, FUTA 0.6% up to $7k, CA SUI 3.4% up to $7k, etc.) and assume the nanny uses their full sick leave entitlement (which is a cost in that you pay wages even when they take sick days). We’ll also include an approximate cost for workers’ comp insurance.
Scenario: A family hires a nanny for 20 hours per week, at a gross hourly rate of $25. The schedule is Monday-Friday 1pm-5pm (4 hours each day). There is no overtime, since the nanny never works over 9 hours in a day or 40 in a week.
Hourly Wage (gross): $25
Weekly Hours: 20
Weekly Gross Pay: $25 × 20 = $500 gross
Annual Gross Wages: $500 × 52 = $26,000 gross per year
Now, let’s break down the employer’s costs on top of the wages:
| Cost Item | Annual Cost | Notes |
|---|---|---|
| Nanny’s Gross Wages | $26,000 | (This is the base salary for 20 hrs/week) |
| Employer FICA (Social Security & Medicare) | $1,989 | 7.65% of $26,000 |
| Federal Unemployment (FUTA) | $42 | 0.6% on first $7,000 |
| CA Unemployment (SUI @ 3.4% + ETT) | $245 | 3.4% + 0.1% on first $7,000 |
| Workers’ Comp Insurance | ~$200 | (Estimated – could be ~$100-$300 range) |
| Paid Sick Leave | ~$480 | (Coverage of 6 sick days at $25/hr) |
| Payroll Service Fees (optional) | ~$600 | (If using a service, e.g. ~$50/month) |
| **** | — | |
| Total Annual Cost (Employer) | ~$28,500 | (Not including optional payroll service) |
In this part-time scenario, the family’s total cost is roughly $28.5k for the year, compared to the nanny’s gross earnings of $26k and the nanny’s net (take-home) pay of around $22k (after the nanny’s own taxes). The “hidden” overhead is on the order of 10-12%. Note that the sick leave cost is shown assuming the nanny uses their entitled 6 days; if they don’t use all of it, you wouldn’t actually pay those hours (but you should be prepared for it). If the family uses a payroll service, that adds another ~$600 per year in fees, but it saves a lot of time – which might be worth it, considering the IRS estimates household employers spend 60 hours/year on tax compliance if doing it themselves.
Scenario: A family hires a nanny full-time, and the schedule is 9 hours per day, Monday-Friday (for example, 8am-5pm, with an hour lunch break covered by the parents – effectively 9 hours of work each day). The agreed gross pay rate is $20/hour. Overtime: The nanny works 45 hours in a week, which is 5 hours above 40, so those 5 hours must be paid at time-and-a-half. (Daily, they work 9 hours which does not exceed California’s 9-hour daily limit; however, federal law requires OT pay for the 41st-45th hours of the week.)
Cost breakdown for the employer:
| Cost Item | Annual Cost | Notes |
|---|---|---|
| Nanny’s Gross Wages | $49,400 | (Includes ~$47,840 straight time + ~$1,560 overtime) |
| Employer FICA (Social Security & Medicare) | $3,778 | 7.65% of $49,400 |
| Federal Unemployment (FUTA) | $42 | 0.6% on first $7,000 (max $42) |
| CA Unemployment (SUI + ETT) | $245 | 3.5% on first $7,000 (max ~$245) |
| Workers’ Comp Insurance | ~$500 | (Estimated higher due to higher wage & full-time) |
| Paid Sick Leave | ~$800 | (5 days of sick leave at 9 hrs/day × $20) |
| Overtime Premium | Included above | (Overtime wages are already included in gross $49.4k) |
| Payroll Service Fees (optional) | ~$600 | (If using service for payroll & taxes) |
| **** | — | |
| Total Annual Cost (Employer) | ~$54,800 | (Approx. $54.2k without payroll service fees) |
In this full-time case, the family’s out-of-pocket cost is about $54,000-$55,000 for the year (not including the convenience of a payroll service). The nanny’s take-home pay would be roughly $40,000 after their taxes in this scenario, so again the employer’s total cost is about 35% higher than the nanny’s net pay. Notice that the overtime contributed an extra $1,560 to the gross wages for the year – not a huge fraction of the total, but certainly a cost to plan for. If the family had tried to circumvent overtime by paying a flat salary (say $950/week salary), they would still legally owe the overtime differentiation – so it’s simpler to think in terms of hourly pay as we’ve done.
Also, recall that at this pay level, the family may be able to offset some costs through tax benefits. For instance, if they have access to a Dependent Care FSA, they could pay $5,000 of the nanny’s wages with pre-tax dollars, saving perhaps $1,500 in taxes. They may also be eligible for the federal Child and Dependent Care Tax Credit on a portion of the childcare expenses. These can somewhat reduce the net cost of a nanny to the family (essentially government subsidies to encourage paying for childcare legally). It’s wise to consult a CPA or use resources from a nanny payroll provider to maximize these benefits.
Scenario: A family with demanding jobs has a nanny for 50 hours per week. Suppose they agree on an hourly rate of $18. The schedule might be 10 hours a day, Monday-Friday. This schedule does incur overtime: 10 hours each day means 1 hour of OT per day (beyond 9) under CA law, and in total 50 hours means 10 OT hours per week (beyond 40) under federal law – those actually overlap; effectively hours 41-50 in the week are overtime. All overtime hours are paid at 1.5 × $18 = $27/hour.
Cost breakdown:
| Cost Item | Annual Cost | Notes |
|---|---|---|
| Nanny’s Gross Wages | $51,480 | (Includes overtime pay) |
| Employer FICA (Social Security & Medicare) | $3,939 | 7.65% of $51,480 |
| Federal Unemployment (FUTA) | $42 | (0.6% of first $7k) |
| CA Unemployment (SUI + ETT) | $245 | (3.5% of first $7k) |
| Workers’ Comp Insurance | ~$600 | (Higher payroll and more hours -> higher premium) |
| Paid Sick Leave | ~$864 | (Assuming 48 hours sick leave used at $18) |
| Overtime Premium | Included above | (OT wages included in gross $51.48k) |
| Payroll Service Fees (optional) | ~$600 | (if using one) |
| **** | — | |
| Total Annual Cost (Employer) | ~$57,200 | (Approx. $56,600 without payroll service) |
In this overtime-heavy scenario, the family’s total cost is about $56k-$57k for the year, whereas the nanny’s net take-home pay would be on the order of ~$42k. The lower base hourly rate ($18) is partially offset by the fact that 10 of those hours every week are paid at time-and-a-half ($27). As a result, the nanny’s effective hourly rate for 50 hours is $19.80 (since overtime boosts the average). From the employer’s perspective, the overtime added roughly $5,400 to the gross annual wages (compared to if they somehow capped at 40 hours). It’s worth asking: would it be cheaper to hire two part-time nannies splitting the hours to avoid overtime? Possibly – but then you might incur duplicate fixed costs (two sets of unemployment taxes, maybe two workers’ comp policies or a higher premium for two employees, etc.). Many families in LA find one trusted nanny working longer hours is worth the overtime cost, but it’s important to go in with eyes open about those costs.
Comparing Scenarios: These case studies show how both schedule and hourly rate affect your total costs. Case 2 (45 hrs @ $20) and Case 3 (50 hrs @ $18) end up with similar annual costs in the mid-$50k range, even though one family is paying a higher hourly wage. The family with the lower hourly rate but more hours is paying for a lot of overtime. On the other hand, the family in Case 1 with a high hourly ($25) but low hours has a much lower overall cost (~$28k). When budgeting, you should forecast both the hours you’ll need and the pay rate, and remember to add roughly 10-15% for taxes and insurance. Also factor in things like a year-end bonus (which many families give – often one or two weeks’ pay as a holiday bonus), mileage reimbursement if the nanny drives the family car or their own for errands (the IRS mileage rate is ~$0.65/mile in 2025), and any benefits you provide (e.g. health stipend).
Legally employing a nanny in Los Angeles comes with significant responsibilities and costs beyond the paycheck. You need to account for employer taxes, overtime premiums, workers’ comp insurance, paid sick leave, and ensure you’re following all California and federal labor laws. The peace of mind of doing it right – and the benefits to your nanny (Social Security credits, unemployment safety net, etc.) – are well worth it, but it does require planning and budgeting.
Here are some final tips to manage the process:
Use a Payroll Service: Consider using a household payroll service like GTM Payroll Services or HomeWork Solutions to handle calculations, tax filings, and pay stubs. These providers are experts in nanny tax compliance. While their services cost money (often on the order of $40-$80 per month), they can save you countless hours and help avoid costly mistakes. They also offer tools like nanny tax calculatorsand can assist with end-of-year tax forms (W-2, Schedule H on your tax return, etc.). As an added bonus, many will help you obtain workers’ comp or point you to partners for coverage.
Take Advantage of Tax Breaks: If available, use a Dependent Care FSA through your or your spouse’s employer to pay part of your nanny’s wages pre-tax (up to $5,000) – this can save a family easily $1,000-$2,000 in taxes. Also, see if you qualify for the Child and Dependent Care Tax Credit, which can credit a portion of your childcare expenses on your tax return. (You can’t double-dip the same dollars for both the FSA and the credit, but most families in high tax brackets max out the FSA first, then may get a small credit on remaining expenses.) These programs don’t reduce the paycheck or the upfront cost of employing a nanny, but they reimburse you later by lowering your tax bill, effectively offsetting some of the “hidden costs.”
Budget for the “Extras”: When calculating what you can afford for a nanny, remember to budget for the employer taxes, insurance, and any benefits or perks. A good rule of thumb: add roughly 15% on top of the nanny’s gross pay to cover employer-side costs. If you have a firm budget of, say, $50,000/year, don’t promise all $50k as salary – or you will exceed your budget once taxes and insurance are added. Instead, you might target a gross salary around $43k-$45k, which will end up around $50k with all the additional costs.
Stay Up to Date: Labor laws and tax rates can change. (For example, the California sick leave law just expanded from 3 to 5 days in 2024, and minimum wage ticks up annually.) Keep informed each year about new requirements – a payroll service or resources from companies like HWS/GTM can be very helpful, as they publish updates for household employers. 2025 brought changes like the $2,800 nanny tax wage threshold and the higher LA minimum wage; 2026 and beyond will have their own adjustments.
By understanding these hidden costs of legal nanny payroll, you’re better equipped to be a fair and compliant employer. It may seem daunting at first – and yes, paying your nanny legally is more expensive than paying cash under the table – but it shields you from legal risks and provides your nanny with proper benefits and protections. In the long run, professionalism pays off. Your nanny will appreciate that you’re investing in their security (social security, unemployment, etc.), and you can rest easier knowing you won’t face nasty surprises like tax audits or injury liability. With careful planning and perhaps some professional help, you can successfully navigate nanny payroll in Los Angeles, giving your family quality care and your employee a legal, stable job.
Sources:
Guaranteed hours mean your nanny is paid for an agreed minimum number of hours per week regardless of whether you use them. If you agree to 40 hours and only need 30 one week, you owe 40 hours of pay. California household employment law treats scheduled hours as wages owed.
If your nanny has guaranteed hours and you are not using them because you are traveling, you generally owe their guaranteed pay. If you negotiate a reduced vacation rate in advance and in writing, that may apply. Unilaterally not paying for weeks you are away is a wage violation.
No. In California, a household employee who works regular hours for one family is an employee, not an independent contractor. Misclassifying them as a contractor to avoid employer obligations creates retroactive tax liability and potential penalties.
California does not legally require holiday pay, but paying for major holidays is standard in Los Angeles. Most work agreements list specific paid holidays. If your nanny works on a holiday, they should receive their regular pay plus any applicable overtime.
Beyond hourly pay, expect: employer payroll taxes (roughly 10 to 12% of gross wages), paid sick leave (required by California law), 10 days paid vacation (competitive standard), and potentially a health contribution. Placement agency fees are typically 20% of first-year gross salary.
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