Household Staffing and Services Pricing Guide

Legally, household workers like nannies, housekeepers, and caregivers are almost always classified as W-2 employees because you control their schedule, tools, and how the work is performed. Misclassifying them as 1099 independent contractors is tax fraud and can result in severe financial penalties. Filing a W-2 ensures your helper is eligible for unemployment and social security benefits.

To find the true cost, you must add approximately 10% to 15% on top of the worker's gross hourly rate to cover employer payroll taxes and workers' compensation insurance. If you use a placement agency or payroll service, you must also factor in their flat fees or monthly subscription rates. This combined total represents your actual out-of-pocket expenses.

Competitive packages typically include two weeks of paid time off, three to five paid sick days, and paid federal holidays. Many families also provide a monthly healthcare stipend or contribution toward health insurance, especially in highly competitive metropolitan markets. Offering a guaranteed hours clause is also standard to ensure consistent weekly income for your staff.

Yes, the federal Fair Labor Standards Act requires you to pay household employees one and a half times their regular rate for any hours worked over 40 in a single workweek. Live-in employees have different overtime rules depending on your specific state's labor laws, which you must check to remain compliant. Salaried arrangements do not exempt you from these legal overtime requirements.