11 Standard Nanny Benefits You Didn’t Know

This guide covers the the standard nanny benefits every household employer should offer—from legally-required protections like W-2 classification and overtime, to industry-standard benefits like PTO, paid holidays, severance, and health insurance. We explain why each one matters for attracting and retaining qualified caregivers.

What many families forget—or aren’t even aware of when hiring—are the standard nanny benefits that should be a part of every family-nanny relationship. Whether you employ a part-time or full-time nanny, certain benefits are standard and should be upheld. In fact, a willingness to provide basic standard nanny benefits like overtime, a standard working agreement and more, ensures your ability to attract qualified nannies and provides an incentive for your nanny to stay with you long-term. Here we’ll break down 11 standard nanny benefits all families (and nannies) should be aware of before entering into a partnership.

Working Agreement: Establishing a Solid Foundation

A successful family-nanny relationship begins with clear communication and well-defined expectations. One of the fundamental components of this foundation is a carefully crafted working agreement that covers every scenario from PTO to health benefits to sick days and pay schedule. This agreement acts as a roadmap, guiding both parties through their roles and responsibilities while fostering mutual respect and understanding.

Not sure what a work agreement should actually look like? We have a guide that breaks down the most important clauses to include. The guide is FREE. Check it out here.

Why a Working Agreement Matters

Consider the working agreement as a handshake in writing—it solidifies the terms and conditions of your collaboration. By clearly outlining what is expected from both the family and the nanny, you ensure that everyone is on the same page from the very start. This proactive approach helps prevent misunderstandings down the road, creating a harmonious work environment.

The working agreement covers a range of crucial topics, such as work hours, job responsibilities, compensation, and benefits. It also addresses more nuanced aspects, such as overtime policies, communication preferences, and any specific family requirements.

Creating a Collaborative Document

Crafting a working agreement is a collaborative effort. It provides the opportunity for open discussions about expectations and preferences. Both parties can openly communicate their needs, ensuring that the agreement reflects the reality of the job and is fair to everyone involved.

The following standard nanny benefits are important to consider adding to your working agreement. Remember, no nanny should start work without agreeing to and signing the working agreement. It’s imperative that you and your nanny understand the terms and that everyone feels respected and supported.

Remember, the working agreement is a dynamic document that can evolve as circumstances change. Regularly revisiting and updating the agreement allows both the family and the nanny to adapt to new situations while maintaining transparency and trust.

11 Standard Nanny Benefits to Consider:

1. Overtime 

Under the Fair Labor Standards Act (FLSA), you are required to pay your nanny overtime when they work more than 40 hours in a week or over 8 hours in a day. According to the FLSA, one exemption to this is if you have a live-in nanny. Even so, you still must pay your nanny their regular wage for every hour worked.

Overtime pay isn’t merely one of the standard employment benefits; it’s a tangible demonstration of appreciation for the extra effort your nanny invests. By compensating your nanny at the standard rate of 1.5 times their hourly wage for overtime hours, you acknowledge their willingness to go above and beyond.

No matter how much your nanny loves your kids, they’ve agreed to a certain number of hours of work, just as you have. You may think they don’t mind and they’re simply “doing you a favor” by staying an extra hour when you’re late from work. But please respect your nanny and their profession by adhering to this standard nanny benefit.

Remember, the goal is to maintain a working environment that nurtures respect and values your nanny’s time. Adhering to overtime regulations is not just a legal requirement but also a reflection of your commitment to cultivating a professional and harmonious partnership.

Related: Unveiling the World of Nannies: What They Do And Their Responsibilities

2. W2 vs 1099

We hear of so many nannies being issued a 1099 or getting paid ‘under the table’ in cash. Unfortunately, this is both illegal and unfair to your nanny. A nanny is classified as an employee of your family by the IRS, not an independent contractor. In other words, once you hire a nanny, you become a legal employer (which we know may new news to many families hiring for the first time).

As stated by the IRS:

“Household employees include housekeepers, maids, babysitters, gardeners, and others who work in or around your private residence as your employee. Repairmen, plumbers, contractors, and other business people who provide their services as independent contractors, are not your employees. Household workers are your employees if you can control not only the work they do but also how they do it.”

Misclassifying nannies as independent contractors has significant consequences. When a nanny is legally considered an employee, the employer is responsible for withholding and paying employment taxes. Independent contractors, on the other hand, handle their tax responsibilities. By issuing 1099 to a nanny, you’re effectively transferring the tax burden onto them, an arrangement that contradicts legal requirements and ethical practices.

As the employer, you dictate how your nanny does their work. For example, you decide their hours and set their schedule, you instruct on their method of care, and you supply the tools necessary for the job. 

As an employer to your nanny, FICA taxes are split evenly between you and your nanny (FICA taxes are a combination of Social Security and Medicare taxes). Considering your nanny to be an independent contractor and issuing 1099 means they pay both the employer and employee shares of FICA taxes.

This standard nanny benefit must be upheld, regardless of whether your nanny is part-time or full-time. This not only safeguards your family against potential legal issues but also ensures your nanny’s fair treatment and financial security. You can read our blog on taxes for nannies here. And, if you need support setting up compliant payroll, we have you covered and can handle it all from end to end.

3. Guaranteed Hours

Guaranteed hours for nannies is a big benefit that’s often missed. 

But what are guaranteed hours? 

If you and your nanny have agreed to them working 40 hours a week, your nanny receives a 40-hour guaranteed pay each week, regardless of how much they worked (unless they worked over 40 hours — then they’d receive overtime pay).

For example, let’s say Grandma is coming on Friday and you decide you don’t need your nanny for that day. Since your nanny was available for work and you chose not to use them, they still get paid for Friday. 

Your nanny committed to being available to you for those 40 hours—or whichever amount you agreed upon—each week. You’re paying for their availability, even if you choose not to use it. 

Don’t leave your nanny in the lurch by not paying them for an hour, a day, or a week you don’t need them because of a change in your plans. 

Life often throws curveballs, reshaping plans at a moment’s notice, which is totally normal. However, ensuring that your nanny isn’t left financially vulnerable due to such shifts is a matter of integrity and responsibility.

Also, guaranteed hours aren’t merely a contractual convenience; they form a cornerstone of financial stability for your nanny. By offering a dependable income, even when the schedule fluctuates, you enable your nanny to manage their finances more effectively and navigate life’s uncertainties with confidence.

Incorporating guaranteed hours into your nanny’s compensation package (and work agreement!) goes beyond administrative formalities. It lays the groundwork for a partnership characterized by stability, understanding, and equitable treatment. Seasoned nannies may even regard this benefit as a sign of a respectful work environment.

Guaranteed hours are a standard nanny benefit and should be included in the benefits you offer to any nanny. Many experienced nannies may ask for guaranteed hours upfront, as well.

Related: The Ultimate Guide: 20+ Essential Questions to Ask Potential Nannies

4. Banking Hours

Banking hours tie hand-in-hand with guaranteed hours for a nanny. Banking hours are frowned upon in the nanny industry and it’s also illegal. 

Here’s what banking hours mean:

Using the same example as above, let’s say Grandma is coming to town Friday and you don’t need your nanny for that day. Instead, you want to ask your nanny to work a different day the following week to make up those unworked hours. Or maybe, you’d like them to come in an hour early one day and stay a few hours late another day until the hours are met.

The problem here is your nanny was available for work on Friday and you chose not to use them. Asking them to make up those hours so they “deserve” their entire paycheck is disrespectful to your nanny. 

You’re placing the weight of your decision on your nanny’s shoulders and asking them to make up for it. But if you chose not to use their services when they were available, that’s on you as the family and employer.

The FLSA requires all “covered employees” to be paid for all hours worked in a workweek, and nannies fall under the “covered employees” umbrella. This means asking your nanny to make up those hours the following week or throughout the next month is illegal. 

While it’s not illegal to ask your nanny to make up those hours in the same week, it’s still unfair to your nanny, and they should be under no obligation to do so. 

Banking hours isn’t a good practice in the nanny industry. And as an employer to your nanny, your desire should be to foster a trusting, amicable relationship with your nanny. 

5. Paid Time Off

Full-time nanny benefits vary from part-time nanny benefits, but just like any professional, your nanny deserves moments to recharge and rejuvenate. Providing paid time off isn’t just a matter of fairness; it’s about acknowledging the hard work and dedication your nanny brings to your family. By offering PTO, you show that you understand the need for work-life balance and value their well-being.

While the importance of paid vacation holds for both part-time and full-time nannies, the allocation of days may vary based on the arrangement. Part-time nannies may receive only a few PTO days, reflecting the nature of their commitment.

On the other hand, full-time nannies, who play a significant role in your family’s daily routine, typically receive a more comprehensive PTO package such as two weeks a year. The aim here is to ensure that regardless of the schedule, your nanny can enjoy well-deserved time off to recharge, pursue personal interests, and return to their role with renewed enthusiasm. Also, it not only contributes to their job satisfaction but also nurtures a sense of commitment that extends beyond work hours. 

If your family is going on vacation for a week and you’re worried about your nanny, you have a couple of options. You can:

• Allow them to rest
• Bring your nanny on vacation and discuss proper compensation in advance
• Ask them to do light housework, dog- or house-sit, or run some errands

Remember, being a nanny is a hard job. It’s exhausting work and your nanny gives their all to your family. It’s ok to let them have a break and take some time to refresh.

6. Sick leave

Offering sick leave to your nanny goes beyond a mere contractual obligation. It’s a testament to your commitment to their health and overall well-being. Just like anyone else, nannies can fall ill unexpectedly, and ensuring they have the option to take time off to recover without financial strain fosters a supportive work environment.

Sick days not only showcase empathy but also build a foundation of trust and loyalty, allowing your nanny to focus on recuperation and return to their role with renewed energy.

While some states have specific sick leave federal laws in place, it’s important to acknowledge that regulations can differ from one jurisdiction to another. Even in areas where there might not be a legal mandate, providing sick leave remains a considerate practice that demonstrates your commitment to your nanny’s health.

Overall, all nannies should get sick leave. Full-time nanny benefits vary from part-time benefits, as a full-time nanny should get more sick leave.

7. Paid Holidays

Every nanny should receive the benefit of paid holidays, whether they’re part-time or full-time. A year’s paid holidays vary between 6-12 days and they should receive at least five to seven holidays.

Paid federal holidays for nannies are like a little boost of appreciation and self-care wrapped into a neat package. Giving them paid time off isn’t just a nod to their hard work – it’s a big high-five to their well-being. After all, taking care of little ones is no easy feat, and having those days to unwind can make a world of difference in keeping their spirits up and energy levels high.

Speaking of fair play, why not sync up holidays? If the boss gets a day to relax, it’s only fair that the nanny gets to put up her feet too. Treating holidays like a shared deal shows that everyone is valued in the game including their work-life rhythm. Plus, it’s a surefire way to keep the nanny-parent relationship sailing smoothly.

8. Severance Pay

While severance pay is not legally required, it’s a standard nanny benefit that should be considered. Whether you’re relocating, your child got into a school they were wait-listed for, or you decided to quit your job, your nanny deserves severance pay.

Severance pay when parting ways with a nanny is a gesture of respect and financial support during a transition. It’s like a safety net that acknowledges the time and effort invested in the job. Offering a standard severance pay also paves the way for a more positive farewell, emphasizing mutual understanding and appreciation.

The minimum standard severance pay for a nanny is two weeks. A good guide to follow is: two weeks of severance pay with an additional week for each year worked. This acknowledges the relationship’s longevity and ensures a smoother adjustment for both parties as they move forward.

9. Mileage Reimbursement

Imagine using your car for all things work-related and not getting reimbursed for it. Not only are you accruing mileage on your personal vehicle, but you’re also adding wear and tear, leading to more frequent oil changes, tune-ups, and tire replacements. 

Basic nanny benefits include mileage reimbursement in their employment package. If your nanny is taking your children to and from school or anywhere else, grocery shopping, or running other errands for you, they are entitled to mileage reimbursement. 

The rate set by the IRS for 2026 is 76 cents per mile. This rate not only ensures a fair reimbursement for the nanny but also aligns with tax regulations. The IRS usually updates this rate annually to account for fluctuating fuel costs and other factors.

10. Cell Phone Stipend

A cell phone stipend is a recognition of how nannies are often the real-time conductors of household coordination. From scheduling playdates to staying in touch with parents throughout the day, their phones are essential tools. Providing a cell phone stipend not only covers work-related costs but also acknowledges the pivotal role technology plays in their caregiving.

If so, consider adding the benefit of a cell phone stipend. Currently, California and Illinois require employers to pay for or reimburse a cell phone stipend, though it’s not specified how much to pay. One suggestion is to pay a flat fee per month, such as $50.

11. Extra Perks

There are a few other nanny benefits that help you attract and retain qualified nannies. 

Nanny Health Insurance

Nanny health insurance or a health care stipend is something beneficial for both you and your nanny.

Healthcare coverage for your nanny can be reasonably affordable. Many places offer assistance if you need help figuring out what’s best for your household.

If you don’t want to offer health insurance for your nanny, consider paying a healthcare stipend that goes toward their healthcare. You can do this by adding an amount to their normal income or by setting up a Health Reimbursement Arrangement (HRA). An HRA is an account you provide your nanny for healthcare costs.

Investment in Career Growth & Education

Want to directly support your nanny’s growth? Consider offering an education stipend toward their continuing education. Hello Nanny! partnered with Purdue Global coursework to provide families a meaningful way to invest in the person caring for your family — and, depending on how it’s structured, may help offset some of the tax burden families already carry as W-2 household employers. For more details and for the best option for your family, visit our partnership page.

End of Year Bonus

A year end bonus is a nice touch (and tradition to start) to show your nanny how grateful you are for their dedication throughout the year. Here is a comprehensive guide to the nanny bonus, including factors you may want to consider in determining the amount.

Car Detail

If your nanny is using their vehicle for work-related purposes, that’s adding a lot of wear and tear to their car. Offering to pay for a car detail every so often is a thoughtful way to recognize what they’re doing for you and your family.

Related: What You Need to Know About the Nanny Background Check

The Right Nanny Benefits Support Retention

Understanding what your nanny deserves is good practice and the foundation of a placement that actually lasts. The families who retain nannies came into the hiring process informed, structured the role professionally, and treated their caregiver with the respect that comes with any legitimate employment relationship.

If this list feels like a lot to hold at once, that’s completely normal. Most families navigating household employment for the first time weren’t handed a roadmap, and that’s exactly what we’re here to help you with.

Whether you’re just starting your search, already in the middle of one, or trying to get an existing arrangement on solid footing, our team is here to help you figure out the right next step.

Book a Hiring Strategy Assessment with our team of experts.

FAQs

Are nanny benefits legally required?

Some are, some aren’t, and the line between the two depends on what state you live in. Overtime pay and W-2 classification are federal requirements with no exceptions (reminder: once you hire a nanny, you are an employer in the eyes of the IRS). Paid sick leave is legally required in many states and cities, including California, New York, and Illinois. PTO, severance, health insurance, and cell phone stipends are not federally mandated but are standard industry practice, especially in high demand urban centers, and skipping them significantly narrows the pool of qualified candidates willing to work with you. If you have specific questions about your local region’s requirements, schedule a call with our team today.

How much PTO should I give my nanny?

Two weeks of paid vacation per year is the industry standard for full-time nannies, plus six to twelve paid holidays. Part-time arrangements are typically prorated based on hours. Paid sick leave is separate from PTO and most career-level nannies expect both. In many states and cities, paid sick leave is legally required regardless of whether you’d like to offer it.

Do I have to pay my nanny if I don’t need them that day?

Yes you do. If you’ve agreed to guaranteed hours and you choose not to use your nanny on a scheduled day, you still owe them for those hours. Your nanny committed to being available to you. If you decide not to use that availability, the financial responsibility is yours, not theirs. This is both an industry standard and a legal requirement under the FLSA. As a friendly reminder, all of these stipulations should be covered within your signed work agreement, which is finalized before your nanny’s first day on the job.

What’s the difference between banking hours and overtime?

Banking hours is asking your nanny to make up hours in a different week to offset time you didn’t use and is illegal under the FLSA. Overtime, on the other hand, is legally required pay at 1.5x the regular rate for any hours worked over 40 in a single workweek. The two are frequently confused, and the distinction matters: one protects your nanny’s income, the other acknowledges extra effort. Neither is optional.

Should I offer my nanny health insurance?

While you’re not legally required to, offering health insurance is one of the benefits that most influences whether a career-level nanny accepts an offer or not. Two common approaches: a flat monthly health stipend added to their paycheck, or a tax-free reimbursement through a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). The QSEHRA is the more tax-efficient option since cash stipends are subject to payroll taxes on both sides, while QSEHRA reimbursements are not. Read our guide to nanny health insurance here. It’s worth nothing that health insurance can often be handled by your payroll provider.

How much severance should I give my nanny?

Severance isn’t legally required, but it’s a standard professional courtesy. If your family is relocating, your childcare needs are changing, or you’re ending the arrangement for any reason that isn’t performance-related, severance is both the right thing to do and a reflection of the professional relationship you built.

What is the current IRS mileage reimbursement rate for nannies?

The 2026 IRS standard mileage rate is 76 cents per mile. If your nanny drives your children at any point using their car, you’re responsible for reimbursing that mileage at this rate. It should be written into your work agreement before day one, not figured out after the fact.

Do part-time nannies get benefits?

Yes, but the type and amount may differ from full-time arrangements. Part-time nannies are entitled to the same legal protections, including W-2 classification, overtime for hours worked over 40 in a workweek, and paid sick leave where state law requires it. PTO, holidays, and other benefits are typically prorated based on hours for part-time arrangements, but should still be discussed and documented in a work agreement before your nanny’s first day.

This post was originally published in January 2023. It has been updated.