During my 35 years leading GTM Payroll & HR, I have seen one recurring mistake that costs families their peace of mind and, at times, their financial security: treating household employment as “informal.”
As you know, many families often view hiring a nanny, housekeeper, senior caregiver, or other household employee differently than hiring someone in a traditional business setting. Because the work happens inside the home, many assume employment laws somehow do not apply in the same way.
While we all work to educate families on compliance, unfortunately, these assumptions can still take hold and create serious problems.
A recent lawsuit involving Kylie Jenner is another reminder that employment laws do not stop at the front gate. Whether your client is a celebrity with multiple household employees or a busy family hiring a part-time nanny, if they hire someone to work in their home, they are an employer.
This is not an isolated situation either. In recent years, there have been other household employment-related claims, such as the one involving Jason Sudeikis. While these cases make headlines because of the people involved, the underlying issues are the same risks that everyday families face when household employment is handled casually.
For nanny agencies, this creates an important opportunity to reinforce once again that household employment should always be treated as a professional employment relationship.
Compliance is Not Optional
One of the biggest misconceptions families have is that labor laws only apply to corporations or businesses with many employees. But you know the reality: many state and federal labor laws apply the moment a family hires even one employee.
That can include laws regarding:
- Overtime pay
- Minimum wage
- Meal and rest breaks
- Paid leave
- Wage notices and wage statements
- Payroll taxes
- Workers’ compensation
- Recordkeeping requirements
- Discrimination and harassment
Families who ignore these obligations may not realize the exposure they have created until years later, when a former employee files a complaint or lawsuit.
I often remind families that good intentions are not a legal defense. Most household employers are not trying to break the law. They simply do not understand that these rules apply to them.
The “Handshake Deal” Can Become a Major Liability
Another mistake I frequently see is relying on verbal agreements.
Families understandably want household employment relationships to feel warm, personal, and trusting. And they should. You’re inviting someone into your home, often to care for loved ones.
But avoiding formal documentation creates confusion and conflict later.
Without a written work agreement, disputes can arise over:
- Guaranteed hours
- Overtime expectations
- Paid time off
- Duties and responsibilities
- Travel expectations
- Overnight care
- Reimbursements
- Performance reviews
- Pay increases
- Termination terms
When there is no documentation, it often becomes one person’s memory against another’s.
This is why I have always encouraged nanny agencies to help normalize professionalism from the beginning. Written agreements, legal payroll practices, and clear communication are not signs of distrust. They are signs of a healthy and professional employment relationship.
Documentation is Protection
In household employment, documentation is one of the most important forms of protection your families can have.
Accurate payroll records, timesheets, signed agreements, and compliant wage statements help establish clarity and accountability. If a dispute arises later, those records can become a family’s strongest defense.
At the same time, professional employment practices also benefit employees. Legal pay and proper payroll records help household workers qualify for:
- Social Security and Medicare benefits
- Unemployment benefits
- Workers’ compensation protections
- Verifiable income for mortgages or apartment rentals
- Paid leave protections where applicable
Professional household employment protects everyone involved.
Why This Matters for Nanny Agencies
You are in a unique position to elevate standards across the household employment industry. And many agencies do this daily. Professionalism in household employment is growing amid ongoing education efforts.
Families trust you to not only help them find qualified caregivers but also to guide them through the hiring process responsibly. Agencies that educate clients about legal pay, documentation, insurance, and compliance position themselves as long-term advisors rather than simply placement providers.
As household employees better understand their rights and seek professional workplaces, that guidance matters more than ever.
My mission at GTM has always been to take the complexity out of being a household employer. We help families navigate these risks so they can focus on what matters most: their families and their homes.
The message to all your families is simple: don’t wait for a legal headache to start taking compliance seriously.
Remember that GTM is here for you and your families as a resource for all things concerning household payroll. Please don’t hesitate to contact us with questions or to request information.
Get your free: