A written nanny contract should spell out who the parties are, the nanny’s status as a household employee, pay and tax handling, hours and overtime, guaranteed hours, specific duties, time off, driving rules, confidentiality, trial period, termination terms, and the legal paperwork the family has to complete. Knowing what to include in a nanny contract matters because most disputes between families and nannies trace back to something that was assumed but never discussed. Putting it in writing before the first day forces that conversation upfront.
The Parties and the Term
Open with the full legal names and addresses of the family (as employer) and the nanny (as employee), plus the exact date the contract takes effect. That date is when legal obligations like tax withholding and employment eligibility verification begin.
Say whether the job is at-will or runs for a fixed term. In 49 states, employment is presumed to be at-will, meaning either side can end it at any time for any lawful reason. A contract can override that by locking in a term (say, one year) or by listing the only grounds for ending the relationship early. If you want flexibility, state that it’s at-will. If you want stability, write the term, say what happens when it ends, and whether it auto-renews.
Classify the Nanny as a Household Employee
One of the most expensive mistakes families make is treating a nanny as an independent contractor and issuing a 1099 instead of a W-2. The IRS looks at behavioral control (who decides how the work gets done), financial control (who supplies tools and sets pay), and the type of relationship (ongoing, benefits offered). A nanny who follows your schedule, works in your home, uses your supplies, and cares for your children the way you direct is an employee.
That means the family withholds the employee’s share of Social Security and Medicare, pays the employer’s share, and issues a W-2 at year’s end. Misclassification can trigger back taxes, penalties, and interest. State plainly in the contract that the nanny is a household employee for tax purposes.
Pay, Taxes, and Hours
Spell out the gross hourly wage or weekly salary, the pay schedule (weekly or biweekly), and the payment method. If the family pays cash wages of $3,000 or more to the nanny during 2026, federal law requires withholding 6.2% for Social Security and 1.45% for Medicare from every paycheck, plus a matching 7.65% as the employer’s share.1Internal Revenue Service. Topic No. 756, Employment Taxes for Household Employees That threshold applies to total cash wages for the calendar year, not per paycheck.
The family also owes federal unemployment tax if total cash wages to all household employees hit $1,000 or more in any calendar quarter. The FUTA rate is 6.0% on the first $7,000 paid to each employee, though a credit of up to 5.4% for state unemployment contributions usually brings the effective rate down to 0.6%.2Internal Revenue Service. Publication 926 – Household Employer’s Tax Guide
Families report and pay these taxes by attaching Schedule H to Form 1040. The contract should note that the family handles payroll tax withholding and will provide a W-2 by January 31 each year. If a household payroll service is doing the math, say so.
Overtime
Under the Fair Labor Standards Act, nannies are domestic service employees entitled to at least the federal minimum wage for all hours worked and overtime at one and a half times the regular rate for hours over 40 in a workweek.3U.S. Department of Labor. Fact Sheet 79D – Hours Worked Applicable to Domestic Service Employment Under the Fair Labor Standards Act State the overtime rate and whether prior approval is needed.
One exception matters: live-in nannies who reside in the family’s home are exempt from the FLSA overtime requirement, though they must still receive at least minimum wage for every hour worked.4eCFR. 29 CFR 552.102 – Live-in Domestic Service Employees If the arrangement is live-in, address this and define what counts as on-duty versus personal time.
Guaranteed Hours
Most professional nanny contracts guarantee a set number of hours each week. If the contract guarantees 40 and the family only uses 35 one week because of a vacation or early pickup, the nanny still gets paid for 40. This stabilizes the nanny’s income and gives the family priority on the schedule. State the guaranteed minimum, and say whether unused hours can roll over.
Schedule and Duties
Pin down the regular working days, start and end times, and the flexibility expected for occasional late pickups or early mornings. Language like “as needed” invites conflict. If evening or weekend coverage comes up, describe how much notice is required and whether those hours carry a different rate.
List the nanny’s core responsibilities: feeding, bathing, activities, nap schedules, transportation to school or appointments. Then draw a line around non-childcare work. Light housekeeping tied to the children (cleaning up after meals, tidying play areas, children’s laundry) is standard. Cleaning the whole house, doing the family’s laundry, or running unrelated errands is not, unless you agree to it and pay for it. Favors that quietly become expectations are the single biggest source of resentment in nanny relationships.
Household Rules and Communication
Cover screen time, visitors during work hours, discipline philosophy, food and allergy rules, and use of family property like phones or streaming accounts. Establish a communication rhythm: daily logs, weekly check-ins, a shared app. Outline emergency protocols for medical issues, severe weather, and fire safety. If the nanny will administer medication, require written instructions and parental authorization for each one.
Driving and Transportation
If the nanny will drive the children, the contract needs to address whose vehicle is used, minimum auto insurance coverage, and car seat requirements. If the nanny uses a personal vehicle for work-related driving, reimbursement at the IRS standard mileage rate of 72.5 cents per mile for 2026 is a clean approach.5Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents If the family provides a vehicle, clarify insurance responsibility, personal use restrictions, and who pays for gas and maintenance.
Time Off and Benefits
Federal law does not require employers to provide paid vacation, sick leave, or holiday pay.6U.S. Department of Labor. Vacation Leave Offering none is a good way to lose a qualified nanny. Industry norms run around two weeks of paid vacation, a handful of paid sick days, and major holidays.
List each paid holiday by name. Decide upfront whether the nanny gets an extra day’s pay or a substitute day off when a holiday falls on a non-workday. Also clarify what happens when the family travels without the nanny. If guaranteed hours apply, the nanny still gets paid; if they don’t, that’s a surprise worth avoiding.
A growing number of states and cities now mandate paid sick leave, and many of these laws cover household employees. Accrual rates and annual caps vary by jurisdiction, but if your state has a paid sick leave law, the contract has to meet at least that minimum regardless of what you’d otherwise agree to.7U.S. Department of Labor. About Paid Leave
Other benefits worth addressing: health insurance stipends, mileage reimbursement, a cell phone allowance, meals during work hours, and funds for CPR certification or early childhood education courses.
Confidentiality
Nannies see everything: financial documents left on counters, medical information, security codes, daily routines. A confidentiality clause protects both sides. At minimum, it should prohibit sharing personal details about the family’s home life, finances, health, and schedule with outsiders. It should bar posting photos or information about the children on social media without explicit permission.
Make the clause mutual. The family shouldn’t share the nanny’s personal information, health details, or immigration status either. Keep the scope reasonable. Overly broad language that prevents the nanny from ever discussing working conditions can conflict with labor law protections, since employees have a legal right to discuss wages and workplace conditions with each other.
Trial Period and Annual Reviews
A trial period of 30 to 90 days gives both sides an exit ramp if the fit isn’t right. During this window, either party can end the arrangement with shorter notice than the standard termination clause requires. State the trial length, the shortened notice period, and whether benefits like PTO accrual apply differently during the trial.
Schedule a formal review at the end of the trial period and at least annually after that. These reviews are the natural time to discuss performance, adjust duties, and negotiate raises. Annual merit increases of 2% to 5% are common. The contract doesn’t need to lock in a specific percentage, but it should commit to an annual review date and acknowledge that compensation gets revisited then.
Termination and Dispute Resolution
The termination clause should specify the notice period each party must give, typically two to four weeks. List grounds for immediate termination without notice, such as endangering a child, theft, or showing up under the influence. If the family terminates without cause, a severance provision (often two weeks’ pay) cushions the transition.
Address the return of family property on the last day: house keys, credit cards, garage openers, security fobs, equipment. If the nanny had digital account access, passwords, or home security codes, include a provision for changing those promptly.
For disagreements short of termination, map a resolution path: direct conversation first, then mediation by a neutral third party. Some contracts include arbitration, though it can feel heavy-handed for a domestic relationship. Finally, state which jurisdiction’s laws govern, which is almost always the state where the work is performed.
Required Legal Paperwork
Form I-9
Every employer in the United States, including families who hire a nanny, must complete Form I-9 to verify the employee’s identity and work authorization.8USCIS. Completing Form I-9 The nanny fills out Section 1 on or before the first day of work, and the family reviews original identity and authorization documents and completes Section 2 within three business days of that first day. The family cannot specify which documents the nanny must present. Keep the completed I-9 on file for the duration of employment and for three years after the hire date or one year after termination, whichever is later.
Workers’ Compensation
Whether the family must carry workers’ compensation depends on the state. Roughly half of states require household employers to maintain coverage once the nanny works a certain number of hours per week or earns above a quarterly threshold. In states without a mandate, coverage is voluntary but still worth considering, since a serious on-the-job injury without insurance exposes the family to direct liability. Many families add coverage as a rider on their homeowner’s policy. The contract should state whether coverage is in place and identify the carrier.
Background Checks
Background checks, driving record reviews, and CPR or first aid certifications are standard expectations even where not legally required. If the family runs a background check, the Fair Credit Reporting Act requires written consent from the nanny beforehand. The contract can note that employment is contingent on a satisfactory background check and specify who pays for it.
Amendments and Signatures
Include a clause stating that the contract can only be modified in writing, signed by both parties. Verbal side deals about extra duties or schedule changes tend to be remembered differently six months later. Both the family and the nanny should sign and date the contract, with each keeping an original. If circumstances change significantly, revisit the contract rather than letting it drift out of alignment with reality. A contract that no longer matches the actual arrangement protects nobody.