7 Things that May Get Overlooked When Hiring a Nanny

Sep 13, 2024 | Hiring an Employee, Household Employee Management, Household Payroll & Taxes

Hiring a nanny is an important decision for parents. Here are seven common areas that may be overlooked during the hiring process.

Hiring a nanny is an important decision. You are trusting this caregiver to look after your children and have someone in your home for 20, 40, or maybe even more hours a week. It is a choice you will want to get right. While we offer some valuable tips when hiring a nanny, here are some common areas that may get overlooked during the hiring process.

1. Knowing what you want in a nanny

This may seem obvious … you need someone to care for your children in your home while you work. But finding the right nanny for your family is more than that. What type of personality are you looking for? Do they have a similar child-rearing philosophy and approach to discipline? Do you want them to be active with your kids and take them on walks and to the playground?

Your nanny job description will spell out the experience, background, skills, and education level you seek in a nanny. That will help you narrow the pool of candidates for your position. Also, make sure you are bringing someone into your home who you are comfortable with and who will meet your and your children’s needs.

2. Giving yourself enough time to make an intelligent hire

Even with a good job description and a firm idea of what you want in a nanny, it could take time to find the right fit. You must sort through applicants, conduct interviews, set up a trial day or time to meet with your family for top candidates, run background checks, and check references. This process should be measured in weeks and not days. Give yourself one to three months to find a nanny.

Using an online job site will lengthen the process as you will have more candidates – many likely unqualified – who will apply for your position. Going through a nanny placement agency will save you time and hassles. Based on your requirements, they can have a group of quality candidates for you to review.

In fact, our survey of household employers about the hiring process determined that families who hire a nanny through an agency rather than a website will get a better-quality nanny, one they will keep longer, and spend less time finding the right match.

3. Determining the total cost of employing a nanny

You may have budgeted for your nanny’s wages, but other costs are involved in employing a nanny. You will need to consider:

Employer taxes – can be reduced or eliminated with a Dependent Care FSA and/or the Child and Dependent Care Tax Credit.
Workers’ compensation – coverage may be required in your state and will help cover medical costs and lost wages if your nanny gets hurt on the job.
Overtime pay – for those weeks when you may need your caregiver for more than 40 hours.
Benefits – health benefits and other perks help attract the top candidates.
Back-up childcare – when your nanny takes time off.
Holiday/end-of-year bonus – typically one to two week’s wages. For new nannies, one day’s pay for each month they have worked.
Annual raises – just like in the traditional workforce, nannies should have the opportunity to have annual performance reviews and receive a raise if warranted.
Family changes – if you have another child or add a family pet, you should boost your nanny’s pay.
Job responsibilities – if you need to add duties above and beyond what was agreed to in the initial work agreement – perhaps housekeeping or preparing family meals – your nanny should get a raise.

4. Having backup childcare

What will you do for childcare when your nanny has time off or calls in sick? Will a parent take time off work? Do you have family, friends, or neighbors who can step in and help? Agencies can often provide backup caregivers on short notice. Have a plan of action so you are not scrambling for childcare at the last minute.

5. Checking references and conducting background checks

Even if your nanny was referred to you by a friend or colleague, it is a good idea to call references and run a background check.

Suggested background checks include driving records, social security, credit history, criminal convictions, drug testing, and sex offender registries. Make sure to follow any local or state laws regarding background checks of potential employees. You may be restricted to what you can check from an applicant’s background.

If you are working with an agency, they may be able to conduct a background check for you.

6. Figuring out payroll, taxes, and insurance

Hiring a nanny means you are now an employer with payroll and tax responsibilities. You can download our guide to household payroll at the bottom of this post. It will walk you through everything you need to do as an employer. You can also call us at (800) 929-9213 for a free consultation, and we will be happy to talk about our service and how we can handle nanny payroll and taxes for you.

Payroll and taxes may seem like a hassle, and paying “off the books” is easier. However, there are significant risks in not complying with tax laws, and it is easy to get caught. Plus, your nanny gets important protections and benefits when paid legally.

Also, your nanny is an employee and is not considered an independent contractor.

In many states, household employers are required to carry workers’ compensation. Workers’ comp will help cover lost wages and medical expenses if your nanny gets hurt on the job. Even if a policy is not mandatory, getting voluntary coverage could be a good idea. Lacking the required worker’s comp insurance is an incredibly costly mistake, with fines quickly reaching tens of thousands of dollars.

GTM has licensed insurance brokers on staff who can obtain a policy for you and manage any audits.

7. Writing a nanny contract

A nanny contract is a detailed outline of the work engagement. It establishes a clear understanding between you, as the employer, and your nanny regarding their duties and responsibilities and helps reduce the likelihood of issues and misunderstandings during their employment. A nanny contract will also set the tone of your working relationship with open and clear communications.

Download a free nanny contract template.