5 Learnings From Employing a Nanny

Before I had my first son, I dutifully researched and ultimately selected a perfectly suitable daycare to place him in after I went back to work.  I liked the owner and the environment, and they passed all the checks on my list.  I completed the paperwork and paid the deposit.  All prepared.

But then my son was born – and my world was rocked.  I knew instantly that I couldn’t leave him in a daycare at such a young age.  I debated quitting my job and becoming a SAHM – and almost did – but then the worry of losing that income kept me looking for other options.  Fortunately around this time I was offered a much more flexible work-from-home position by my employer, and I realized that I could hire a nanny.  It would be a win-win.  I would be able to keep my job, yet be home with the baby and the nanny.  What could be better?

So I began my nanny search.  And hired a nanny.  And employed that nanny for over three years before she unexpectedly resigned.  And now that I am finally home with my children, I can reflect back on our learnings from that experience.

It is a job.

This is obvious.  Nannies are performing a job for income just like everyone else.  But the line is blurred when a trusted individual is taking care of your child on a daily basis.  You want that person to become “like part of the family” while still maintaining professional boundaries.  And this is extremely difficult to do.

The right nanny will be a special individual who truly loves children.  She will be patient and kind, hardworking and honest, structured and loyal.  You will entrust her with the most precious people in your life.  So when cracks begin to appear – let’s say the nanny begins having issues with excessive absences, for example – how do you handle it?  It is very different than a corporate job, where you would follow the formal steps of the disciplinary process.  This person is not a colleague – she is in your home taking care of your children.  So you talk to her gently, kindly.  Reinforce the importance of her showing up to work outside of an issue or emergency.  And trust that she will.

But if the issues continue, then what?  This is where it gets sticky.  How aggressive do you want to be with the beloved nanny helping to raise your children?  So you make excuses, turn a blind eye, talk to her again – but too gently.

I’ve since realized that this is a mistake, because by your lack of assertive action you’re essentially telling her “it’s okay.”  But it really isn’t.  Every time the nanny calls in last minute for a questionable reason, parents are stuck scrambling for backup.  And typically if the family has hired a nanny in the first place – there IS no backup.  Which means Mom or Dad has to call in to work and miss the deadline/forgo the big presentation/disappoint the team while meanwhile employing someone who is supposed to help prevent that.

So my learning here is to better outline the boundaries upfront.  Treat it as a job.  Define consequences.  And ultimately remember that you are the employer who sets the rules.  This doesn’t mean that you and your family can’t love the nanny, and treat her with the utmost respect for the significant work that she is doing, but that in the end you are paying her for services rendered – and it is appropriate that you expect those services to be rendered professionally.

Run the background, check references, and ask the hard questions.

It never ceases to amaze me how many people hire nannies without fully checking them out.  I literally know people who do not know their nanny’s last name, do not know where she lives, and wouldn’t be able to recall what kind of car she drives.  I get that many people are hiring on a reference from a friend or neighbor.  But shouldn’t you still want that information?  Call me paranoid, but this is the person helping to raise your children!  You better believe that I want to know every detail I can legally gather.

A common misconception I often hear is that the background checks offered on nanny and babysitter services like Care or SitterCity are adequate.  They’re not.  If you want a full and thorough background check (beyond what can simply be searched online), you have to hire an outside agency or investigator who specializes in these things.  Will it cost?  Yes – likely somewhere around $100-$150.  Well worth it, in my opinion, for peace of mind.

Also – check the references!  And this doesn’t mean simply calling the reference and asking a question like, “how was the nanny?” (I have received reference check calls myself literally asking only that question).  This means having a list of prepared questions ready to ask.  Specific behavioral open-ended questions.  Even the difficult questions.  Things like:

• Tell me about a time when the nanny faced an emergency or urgent situation.  What did she do and how did she handle it?
• How many times has the nanny called in since she has worked for you?  How often has she been late?
• What are the nanny’s top three areas of opportunity?

I have found, throughout many many reference checks for both nannies and babysitters over the years, that the reference will typically give a glowing review.  Every time.  It is not until you really start probing with some of the more difficult questions that the reference may begin to share some of the opportunities as well.  And this is important – you want to understand both a nanny’s strengths and weaknesses going in.  I remember hiring a babysitter once who received rave reviews – yet the time I used her, she played on her phone the entire time while ignoring the children.

Which brings me to my next point: nanny cams.  I am a huge fan.  I do not hide them and I tell every candidate upfront that they are used.  They even know where they are, since they are in plain sight.  If the candidate is not comfortable with it, they are probably not the right caretaker for me.  I’m sorry but every time I step into a place of employment, there are security cameras tracking my every move.  If you’re watching my kids, I want to be able to watch you.

Finally, get to know the nanny.  Have her go through a formal interview process (phone interview followed by face-to-face interview, with prepared questions).  Have her complete a formal employment application.  Write up a contract of your expectations and your childrens’ routine, and have her review and sign it.  Save the documents.  Spend time with her before leaving her alone with your children.  Learn about her personality.  Understand the type of person she is from the beginning.

Paying on the books is a headache that helps me understand why most people don’t.

There will never be high rates of compliance in this area unless significant changes are made.  I am not exaggerating when I say that 98% of nanny employers I know pay under the table.  And I get it.

Because we always opt to do things the hard way (and because we try to “do the right thing”), we paid our nanny on the books.  And it was a nightmare.  Still is – many months later as I continue to receive tax bills.  I’m not recommending paying a nanny illegally, but let me save you the suspense on the learnings we had by doing right by the law:

• Nanny pay is AFTER tax for the employer.  Yes, while every other small business is able to deduct wages off the top, families can’t deduct a dime.  You are paying your nanny after you have already been taxed – and then are taxed again for her.  This is a glaring issue that penalizes the smallest of small businesses – a working mother and father trying to raise a family.
• The Childcare Credit won’t cover it.  Before you take comfort in the hopes that the Childcare Credit will help offset the costs, realize that the maximum credit is $600/year.  That is less than what most local nannies make in a week.
• Fees for compliance increase over time.  Depending on state (we live in California), nanny fees/taxes increase every few years – I believe 3 years is the first significant increase according to my tax advisor.  Also, if you happen to be a nanny employer whose nanny collects unemployment at some point (let’s say while you are on maternity leave for a second child, or even after her employment with you has been terminated), a certain fee will increase up to an additional 9%.  So try to hire a nanny who will stay with for fewer than 3 years, and who will then never ever collect unemployment.  Good luck!
• Overtime is required.  This is actually a good thing as it protects nannies from being taken advantage of by families forcing her to work excessively long weeks.  But it’s hard to compete at market rate with this requirement.  Let’s say the market rate is $15/hour cash (no overtime).  That’s $750/week for 50 hours.  For a family paying on the books, however, that translates to $825/week ($600 for 40 hours at $15/hour, plus an additional $225 for 10 overtime hours at $22.50/hour).  The best part?  Even with the overtime, the nanny may still take home less net pay.  Which brings me to my next point.
• Nannies prefer under the table pay.  At least in this area.  When broaching the topic of paying on the books with candidates, I was faced with frowns, blank stares, and requests to gross up the salary so that the take-home rate would be comparable to the cash market rate.  Wonder how that request would go over with any other type of employer??
• Nannies compare take-home pay rates.  While in most other industries it is extremely taboo to discuss compensation, nannies do it on a regular basis.  Within weeks of hire, my nanny knew and shared what every other nanny in the neighborhood was making.  Heck – I even hear directly when I’m at the park.  So parents paying on the books are at a disadvantage.  Unless you are grossing up, your nanny hears that she is being paid less.  In our case, we were actually paying above market – but her take-home pay was less.  We often highlighted the advantages for her of legal pay: social security, unemployment, overtime, etc.  But I got the distinct feeling that none of this was motivating nor attractive to her, and that she would have preferred the higher take-home rate (which would have been significantly cheaper for us as well).
• The tax process is ridiculously difficult.  For the state of California alone, I received a pile of paperwork each quarter to complete and return.  And it was complex and time consuming.  I simply couldn’t do it, and was scared of making a silly mistake and then being fined thousands later on.  Therefore:
• A nanny tax/payroll company must be hired.  Cha-Ching!  Okay, maybe not an absolute must, but close enough.  So now here is another expense: the cost of the tax company, a cost for payroll, a cost for direct deposit into the nanny’s account, a cost for each filing, etc, etc.  While I love the company that we used and would highly recommend them for their expertise and ability to streamline the process (HomePay), it is not an insignificant chunk of change.
• Workers Compensation insurance is required.  Depending on state, you are required to carry this insurance when hiring a household employee.  This is good to have anyway, and not something I dispute, but it is an added expense that people paying under the table are not required to incur.

And before someone tells me that a nanny is an independent contractor who I can 1099, let me tell you that she is not.  Nannies have been clearly defined as W2 employees and must be treated and paid as such.  There is really no out.

So while I still recommend paying on the books to do things the legal and “right” way, I definitely can’t say I blame anyone who doesn’t.

Accommodate, but don’t overly accommodate.

This is that sticky area again.  You want to accommodate the nanny while still maintaining clear boundaries.  And again I am reminded how hard this is to do.

By accommodation, I mean working with the nanny on various things.  For example, I accommodated our nanny in that I gave her input on the hours she earned each week.  I only needed her until the boys went down for a nap in the late afternoon, but I gave her the option each day to either go home or stay and do chores around the house to obtain more hours.  She opted to go home after the boys were put down, and I was fine with that.  I think this was fair on both ends.

An example of when I feel we over accommodated was when she let me know that she was going to start looking for other jobs, shortly before my second son was born.  She wanted more hours.  Fair enough.

But she didn’t want the weekend hours we could provide, didn’t want to work before 7am, and didn’t want to work beyond 3:30pm (already, we had begun accommodating her schedule preferences almost exclusively).  She indicated that she would leave once she found a suitable position, or that she would leave earlier if we found a replacement sooner.  And so I thanked her for letting me know so that we could begin preparing – and we began the search for a new nanny.

We ended up finding someone we really liked, and I let our current nanny know that we were planning to make an offer.  But she had not yet found anything, and apparently the search hadn’t yielded the results she had expected.  She was upset, and expressed that she had changed her mind and wanted to stay.  And truthfully, I wanted her to stay too.  It would be easier.  My son knew and loved her, she knew the routine, no big shake-up.  And so I agreed, relieved.

My husband disagreed.  He felt that if she had wanted to leave at any point, we should be letting her go.  He really liked the new nanny and felt she would be a great fit for our family.  He worried that we were already over accommodating our current nanny in terms of her hours and some other issues.  But I convinced him to let her stay.  A very key part of this was the nanny’s commitment that she would stay with us until our eldest son started kindergarten about three years out.  We did not ask this of her, but she expressed it and then re-committed on multiple occasions (her long term plan at that point was to take some time off to be with her own child).  I thanked her and expressed my gratitude for her commitment.

Second baby came along and we gave her a raise.  Gave her periodic bonuses.  We continued to accommodate (albeit more reluctantly now) several unexpected absences.  But were secure in the knowledge that she had committed to stay with us another three or so years.

Fast forward 17 months, and the nanny quit anyway.  Over text message, no less.  Said she decided she no longer wants to work and wants to spend time with her child instead.  And this time we didn’t have anyone else lined up.

We never mentioned the broken commitment, and neither did she.  What would it matter at this point?  But I knew – we had over accommodated to our own detriment.  We should have gone with the other nanny when we had the opportunity.  Should have set the expectation that we as the employer choose the working hours (within reason).  So learned the valuable lesson around accommodation – when to do it, and when to say when.

Budget beyond just an hourly rate.

Until we employed our own nanny, I assumed that a nanny is paid an hourly rate and that’s that.  But it’s really not.  As I mention in my first point, it is a real job and should be treated that way.  That means the nanny should receive paid holidays, Paid Time Off (PTO), an annual bonus, and a host of any other perks that may help to retain and motivate her.  I often see new moms posting on mommy forums, asking what benefits they should be offering to their nannies.  Following is what I have seen in our neighborhood as standard:

• Paid holidays.  All the majors, along with any extras that you may have off.  This seems to only apply if the holiday falls on a regularly scheduled workday.  If Christmas Day falls on a Saturday, for example, I haven’t typically seen parents pay for that day.
• Paid vacation.  Two weeks a year is standard around here, with the stipulation that the nanny takes one week of her choosing, and one week of the family’s choosing (e.g. if the family goes on a vacation).  We decided to do things a little bit differently.  She still received two weeks, but it was in the form of PTO, meaning that she could use it whenever for whatever she wanted.  She did not have to use it when we took a family vacation, but she often opted to use at least a few days while we were gone.
• Paid sick time.  This seems to be all over the board.  Most families I know have nannies who have rarely, if ever, called in sick.  If they do, the family may pay the nanny or opt not to – I’ve seen about a 50/50 split.  Our nanny seemed to call in quite a bit, so this was taken out of her PTO.  Once she exhausted all her PTO, remaining sick days for the year were unpaid.
• Annual bonus.  These are typically given at the end of the year, and the average I’ve seen in this area is one week’s pay.  Other families opt to instead purchase a nice gift or gift card for the nanny.  Some families give a bit more – we gave close to two weeks pay plus a gift from the family (for example, one year we got her a crockpot she had mentioned wanting and another year we gave her personalized picture frames with photos of she and the kids).  Don’t skip the bonus.  It is expected and is a way to thank your nanny for all her hard work throughout the year.  Including a heartfelt card expressing your appreciation for all her work goes a long way as well.
• Periodic bonuses.  I’m not sure that I’ve seen a norm on this, but we would give periodic small bonuses (less than $100) throughout the year as we noticed the nanny making an extra effort or just doing a really good job.
• Gifts for life events.  A nanny is close to the family, and her life events should be celebrated.  Birthdays, anniversaries, and other holidays.  When our nanny moved, we gave her a needed gift card for furnishings.  When an extended family member passed, we sent flowers and gave her paid time off.  Acknowledging these events and celebrating or recognizing them with the nanny helps to show her how much you care about her not only as a nanny, but as a person.
• Health benefits.  We did not provide this.  We simply couldn’t afford it!  But I do know of a couple of families who do (the norm around here, however, seems to be not to offer any health benefits).  I know that this is much appreciated by the nanny and can definitely help with retention and her motivation to work.
• Job benefits.  Most local families require their nannies to be CPR certified and First Aid trained.  They expect the nanny to pay for and schedule these classes herself.  That is fair, but in our case we covered the cost of CPR certification, First Aid training, and annual re-certification for our nanny.  This helps her not only with us, but with her future career prospects as well.
• Other perks.  Here is where you can get creative!  I’ve seen some families pay for a gym membership or a bus pass.  Others pick up the nanny’s favorite snacks.  We offered meals and gifts from various travels.  At times we would allow her to bring her son with her – this is a big perk for nannies with young children.  Anything to show that you value the nanny can go under this category.

Make sure you account for all of this in your annual nanny budget.  It is much easier to save a bit of money each month for a year-end bonus than to come up with a large amount all at once.  Don’t skimp on the benefits.  If you would rather skip the holidays or vacation or bonus, then perhaps a nanny is not the right childcare option.  These are standard benefits that a nanny will expect and will come to resent if she does not receive.

This has been my experience with employing one nanny, and interviewing and testing out several others.  I absolutely recommend hiring a nanny as a great childcare option if budget permits and if the right person can be found.  It allows the child to be home, in their neighborhood, following their regular routine, and allows the parents more oversight as to what the child does every day.

Where it gets difficult is with the employer/employee relationship.  The lines can easily blur, so it is important to set clear boundaries from the start – and stick to them!  This helps set expectations for both the nanny and the family, opening up the lines of communication.

If I’m in need again, I will definitely hire another nanny.  Although this time I will be better equipped with knowing what to expect and how to handle different situations.  I will know better what qualities to look for, and what may signal a red flag.  And I will never compromise on background and reference checking.  And ultimately – have trust and hope for the best.