Nanny Taxes in New Jersey

Household employers must comply with tax, wage, and labor laws affecting nannies, in-home senior caregivers, and other household employees. While federal laws cover employers in all states, there are also state- and city-specific regulations that employers must follow. Here’s what you need to know about nanny taxes in New Jersey.

New Jersey Minimum Wage

Household employers must pay domestic workers no less than the state’s minimum wage of $15.13 per hour.

Overtime

All household employees, including live-in workers, in New Jersey are required to be paid at least time and a half for hours worked over 40 in a seven-day workweek.

New Jersey State Unemployment Tax & Rate

In New Jersey, the new employer SUI (state unemployment insurance) rate is 3.2825 percent on the first $42,300 of wages for each employee. Employers also pay 0.1175 percent into the Workforce Development/Supplemental Workforce funds for a total rate of 3.40 percent.

New Jersey is one of a few states that require employees to contribute to unemployment insurance. On the first $42,300 of their wages, employees pay 0.3825 percent into unemployment insurance and 0.0425 percent into the Workforce Development/Supplemental Workforce funds.

Also, when separating from an employee, household employers must provide a post-termination notification to the New Jersey Department of Labor & Workforce Development (NJDOL). They must provide Form BC-10 (Instructions for Claiming Unemployment Benefits) immediately to the terminated employee and electronically to the NJDOL. Employers must also submit a new form (yet to be published by the NJDOL) with specific information to enable the NJDOL to make a benefit determination, regardless of whether the separating employee files a claim. Employers must also provide this new form to separated employees.

Workers’ Compensation Insurance

Household employers in New Jersey must have workers’ compensation coverage for all part- and full-time employees. In New Jersey, you may be able to add workers’ compensation to your homeowner’s policy. If not, get a quote on workers’ compensation insurance.

New Jersey Domestic Workers’ Bill of Rights

The New Jersey Domestic Workers’ Bill of Rights provides a range of rights and employment protections for household employees, including wage protections, anti-discrimination and anti-harassment rights, health and safety protections, and privacy rights.

Here are some of the domestic worker protection requirements for employers:

Work agreements

Families that employ household help must enter into a written agreement or nanny contract with any employee who works more than five hours a month. The contract must document work hours, wages, duties, and other employment matters. Employers must also notify employees of their rights under the Domestic Workers’ Bill of Rights.

Meal and rest breaks

Household employees are now required to receive:

• At least one paid 10-minute break for every four consecutive hours of work unless the nature of the work prevents the domestic worker from being relieved from work for such period due to the nature of their job duties, which may include child care or care of the infirm, elderly, or disabled.
• A 30-minute lunch break after working more than five consecutive hours unless the nature of the work precludes such breaks. Employees are considered on duty during this meal period. That means the meal period is compensable and should be part of overtime calculations unless they are relieved of all work duties and allowed to leave the work site.
• An unpaid day off after six days of work for live-in employees

Wage protections

While most household employees are already entitled to minimum wage and overtime, this new law removes the exclusion for part-time babysitters working in the employer’s home. New Jersey’s minimum wage is $13.73/hour for employers with fewer than six workers.

Termination notice

Employers must give at least two weeks’ notice before terminating a household employee and four weeks for a live-in employee, with exceptions for employee misconduct.

Other rights and protections

Household employees also gained privacy rights and protection from anti-harassment and retaliation. Household employers must provide a notice of these rights.

Learn more about the New Jersey Domestic Workers’ Bill of Rights.

Disability & Family Leave Insurance

Household employees in New Jersey also pay 0.09 percent of taxable wages for family leave insurance (FLI). These rates apply to the first $161,400 in wages.

New employers pay 0.50 percent of the first $42,300 of wages for each employee toward temporary disability insurance (TDI). They do not pay into FLI.

Earned Sick Leave

The New Jersey Paid Sick Leave law applies to all employers – including families that hire household help. Household employees can accrue up to 40 hours of paid sick leave at one hour for every 30 hours worked. While unused sick time must carry over to the following year, it can be capped at 40 hours. An employer can also offer to pay an employee for their unused sick time at the end of the year. However, unused sick time earned but not used doesn’t need to be paid upon separation from employment. Employees start accruing paid leave 120 days after being hired. The law covers all full-time, part-time, and temporary employees.

Paid sick leave can be used for:

• Diagnosis, care, treatment of, or recovery from the employee’s own mental or physical illness, injury, or condition, including preventive care
• Caring for a family member during the diagnosis, care, treatment of, or recovery from a mental or physical illness, injury, or condition, including preventive care
• Time needed because the employee or family member is a victim of domestic or sexual violence. This includes:
  • Medical attention needed to recover from physical or psychological injury or disability caused by domestic or sexual violence
  • Services from a designated domestic violence agency or other victim services organization;
  • Psychological or other counseling
  • Relocation
  • Legal services such as obtaining a restraining order or participating in any civil or criminal proceedings related to domestic violence or sexual violence
• Times when the workplace, school, or childcare is closed by order of a public official due to a public health concern.
• Attending a school-related conference, meeting, or function requested or required by the school

In addition, employees can use paid sick leave for COVID-19-related reasons, including:

• Quarantine based on the advice of a health care provider or public health authority (including the quarantine required when returning to New Jersey from certain states);
• Getting tested for COVID-19;
• Taking care of their children when school or childcare is closed due to an epidemic or public health emergency (including mandatory remote learning during COVID-19)
• Caring for their own, or a loved one’s, physical or mental health or injury, including COVID-19; and
• Getting a COVID-19 vaccine, including travel to and from their appointment and recovery from side effects

Employers must post a notice in a place accessible to workers and provide a written copy of that same notice to their employees.

Learn more about New Jersey State’s Earned Sick Leave.

Pay Frequency

Household employers in New Jersey must schedule a regular payday, and workers must be paid at least twice a month and no more than ten days after the end of the pay period.

Final Pay

All wages are due to a departing household employee no later than the regular payday for the pay period during which the worker’s termination takes place.

Helpful Links for Nanny Taxes in New Jersey

Domestic Workers’ Bill of Rights: What Employers Need to Know

New Jersey Department of Labor and Workforce Development

New Jersey Department of the Treasury/Division of Taxation

New Jersey Earned Sick Leave

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, which means they receive overtime pay of 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 $2,700 or more to any household employee in 2024 (or will pay 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 can withhold from their wages or choose to 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 six percent of cash wages on the first $7,000 you pay an employee.

Mileage Reimbursement

If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2024, the IRS has set the optional standard mileage rate at 67 cents per mile driven. This rate increases to 70 cents per mile on January 1, 2025. Paying mileage is not mandatory or you can reimburse your employee at a different rate. However, if the cost of mileage causes your employee to fall below minimum wage, then you need to reimburse them for mileage.

GTM Can Help with Nanny Taxes in New Jersey

Call (800) 929-9213 for a free, no-obligation consultation with a household employment expert. We’ll answer all your questions and show you how to comply with wage, tax, and labor laws as a household employer. Or, if you’re ready to have GTM Payroll Services handle it all for you, get started with our nanny payroll and tax service.

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