Nanny Taxes & Payroll in Michigan

Minimum Wage

Household employees must be paid at least the highest applicable federal, state, or local minimum wage rate. Michigan’s minimum wage rate of $13.73/hour applies. This rate increases to $15/hour on January 1, 2027.

Overtime Pay Rules

Household employees in Michigan must be paid at least time-and-a-half for hours worked over 40 in a seven-day workweek. Overtime compensation is not required for live-in employees or when work is performed on a holiday.

State Unemployment Tax & Rate

In Michigan, the new employer SUI (state unemployment insurance) rate is 2.7 percent on the first $9,500 of each employee’s wages. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in Michigan must have a workers’ compensation policy for any employee, except those employed for less than 35 hours per week for 13 or more weeks during the preceding 52 weeks. Get a quote on workers’ compensation insurance.

Disability Benefits Insurance

Michigan does not have disability benefits insurance requirements related to household employment.

Domestic Workers’ Bill of Rights

Michigan does not have a domestic workers’ bill of rights.

Paid Leave Laws

Earned Sick Time Act

Michigan’s Earned Sick Time Act (ESTA) requires employers to allow their workers to take up to 40 hours of accrued paid sick time per year.

Eligible household employees start accruing sick time upon commencement of their employment.

Employees accrue one hour of paid sick time for every 30 hours worked. As an alternative to accruing time, employers can frontload earned sick time for their employees at the beginning of the benefit year (or on the date that the individual becomes eligible during the benefit year on a prorated basis).

Accrued but unused earned sick time can carry over from year to year (up to 40 hours). Employers may cap the use of earned sick time at 72 hours per year.

Employers who frontload earned sick leave don’t need to allow the carryover of unused sick time to the next benefit year.

Employers are not required to pay employees for unused accrued sick time.

An employer may require a new worker to wait until the 120th calendar day after commencing employment before using accrued earned sick time.

Paid sick time can be used for:

• The employee’s or the employee’s family member’s mental or physical illness, injury, or health condition; medical diagnosis, care, or treatment of the employee’s or the employee’s family member’s mental or physical illness, injury, or health condition; or preventative medical care for the employee or the employee’s family member
• If the employee or the employee’s family member is a victim of domestic violence or sexual assault, for medical care or psychological or other counseling for physical or psychological injury or disability; to obtain services from a victim services organization; to relocate due to domestic violence or sexual assault; to obtain legal services; or to participate in any civil or criminal proceedings related to or resulting from the domestic violence or sexual assault
• For meetings at a child’s school or place of care related to the child’s health or disability, or the effects of domestic violence or sexual assault on the child
• For closure of the employee’s place of business by order of a public official due to a public health emergency; for an employee’s need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency; or when it has been determined by the health authorities having jurisdiction or by a health care provider that the employee’s or employee’s family member’s presence in the community would jeopardize the health of others because of the employee’s or family member’s exposure to a communicable disease, regardless of whether the employee or family member has contracted the communicable disease

Family members include:

• Biological, adopted or foster child, stepchild or legal ward, a child of a domestic partner, or a child to whom the employee stands in loco parentis.
• Biological parent, foster parent, stepparent, adoptive parent, legal guardian of an employee, an employee’s spouse or domestic partner, or a person who stood in loco parentis when the employee was a minor child.
• Grandparent
• Grandchild
• Biological, foster, or adopted sibling
• Any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship

An employer’s paid time policy may be used so long as it provides at least the same benefits as provided in the ESTA, and may be used for the same purposes, under the same conditions, and accrued at a rate equal to or greater than the ESTA rate. They don’t need to provide additional leave to their employees or create a separate bank of time for earned sick leave.

Employers must display a poster in the workplace listing the specific rights in the ESTA. Download the poster. (PDF)

Employers must also provide written notice of an employee’s rights under the ESTA at the time of hiring. The poster may serve as notice.

Learn more about Michigan’s Earned Sick Time Act.

Other State Regulations

Final Pay

When an employer terminates an employee, or the worker voluntarily resigns, they must pay the worker all wages due by the regularly scheduled payday for the period in which the termination or resignation occurs.

Helpful Links for Nanny Taxes in Michigan

• Michigan Wage & Hour Division
• Michigan Department of Insurance and Financial Services

Federal Regulations

All household employers need to follow certain federal regulations, including:

Fair Labor Standards Act (FLSA) Classification Guidelines

• Household workers are considered employees and not independent contractors. Learn more about misclassifying employees as independent contractors.
• Household workers are also non-exempt employees, meaning they receive at least time-and-a-half for hours worked over 40 per workweek. Learn more about overtime pay.

FICA Taxes

Social Security and Medicare taxes are commonly referred to as FICA taxes.

If you pay cash wages of $3,000 or more to any household employee in 2026 (or paid a domestic worker $2,800 or more in 2025), you must withhold and pay FICA taxes. FICA taxes are 15.3 percent of cash wages.

As an employer, you pay 7.65 percent (6.2 percent for Social Security and 1.45 percent for Medicare).

Your employee's share is also 7.65 percent, which you may withhold from their wages or pay yourself.

You don't withhold or owe FICA taxes on wages you pay to your spouse, child under the age of 21, parent, or any employee under 18 at any time during the calendar year.

Federal Unemployment Tax (FUTA)

If you pay a household employee total cash wages of $1,000 or more in any calendar quarter, you'll owe federal unemployment tax. This is an employer-only tax. FUTA is 6% of cash wages on the first $7,000 of wages paid to an employee.

Mileage Reimbursement

If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2026, the IRS has set the optional standard mileage rate at 72.5 cents per mile driven. Paying mileage is not mandatory in most states, and you can reimburse your employee at a different rate. However, if mileage costs cause your employee to fall below the minimum wage, you must reimburse them for mileage.

Remitting Taxes Quarterly

Household employers can remit taxes, including FICA, employee income, and federal unemployment, quarterly using Form 1040-ES. If a household employer does not remit their taxes quarterly, the entire amount will be due when they file their personal tax return. This could cause an underpayment penalty.

Year-End Requirements

By January 31, household employers must provide Form W-2 to their employees and submit Form W-3 and Copy A of Form W-2 to the Social Security Administration. Then, a household employer must file Schedule H with their personal tax return. Learn more: How to File Schedule H