Let’s talk about it…
If you employ a nanny in your home, it is important to understand one fundamental truth:
Your nanny is not an independent contractor.
But a household employee.
As an agency deeply committed to ethical and professional standards in the childcare industry, I want to explain why this matters—not just legally, but morally and professionally.
1. The IRS Is Very Clear on This
The Internal Revenue Service (IRS) classifies nannies as household employees, not independent contractors.
Why?
Because families typically:
- Set the nanny’s schedule
- Determine the job duties
- Provide the tools and environment (your home, your supplies)
- Direct how and when the work is performed
When you control what work is done and how it is done, that worker is an employee.
A 1099 contractor, on the other hand, operates their own independent business, sets their own terms, and offers services to multiple clients with minimal supervision.
That is not the structure of a traditional nanny role.
2. A 1099 Misclassification Can Be Costly
Some families are told that paying a nanny as a 1099 is “easier” or “saves money.”
In reality, it exposes both the family and the nanny to serious risk:
- Back taxes
- Penalties and fines
- Liability for unpaid employment taxes
- Loss of worker protections
If audited, the responsibility falls on the employer—not the nanny.
Short-term convenience can turn into long-term financial consequences.
3. Nannies Deserve Protection
When you pay your nanny legally as a W-2 household employee, she receives:
- Social Security contributions
- Medicare contributions
- Unemployment insurance
- Workers’ compensation coverage
- Verifiable income for renting or buying a home
- Proper tax documentation
When paid incorrectly as a 1099, the nanny:
- Pays the full self-employment tax burden
- Has no unemployment protection
- Has fewer safeguards if injured on the job
Professional nannies are career childcare providers. They deserve the same employment protections as any other professional.
4. Integrity Builds Trust
As agency owners, as families, and as industry professionals, we set the standard.
Doing things correctly:
- Protects your household
- Protects your nanny
- Models integrity for your children
At Rainbow Nannies, we strongly advocate for proper payroll setup and legal compliance. High-quality childcare is a luxury investment—and it should be handled with professionalism.
5. “But Everyone Else Does 1099…”
Many people misunderstand the law. Some receive outdated or incorrect advice.
But widespread practice does not equal legality.
If you are unsure how to set up payroll properly, there are household payroll services that make the process straightforward and compliant. The administrative step is minor compared to the protection it provides.
Bottom Line
Your nanny is not a 1099 contractor.
But a household employee.
Paying legally is not just about compliance—it is about respect, protection, and professionalism.
When we elevate standards in our homes, we elevate the entire childcare industry.
And that benefits everyone—especially our children.