Learning all the nuances of California nanny tax law is no easy task. To help, we’ve created this overview of everything you need to know about being a householdemployer in California.
Checklist for California household employers
We know you’re busy so here’s a quick “to-do” list with links to extra details below.
Beginning of employment
- Verify caregiver’s work eligibility.
- Set up.
- Obtain the required California workers’ compensation insurance.
- Provide a wage notice.
- Display employment posters.
During employment
- Filereturns, remit taxes and manage correspondence.
- Pay at least California minimum wage weekly.
- Pay overtime, when it applies.
- Pay mileage reimbursem*nt, when it applies.
- Provide a pay stub and keep payroll records each payday.
- Provide California state and local required leave.
- State disability insurance
- Berkeley
- Emeryville
- Los Angeles
- Oakland
- San Diego
- San Francisco
- Santa Monica
Optional benefits for your employee
- Health insurance
Ending employment
- Provide a termination notice.
- Manage unused paid time off.
- Close down yourstate employment tax account(s).
- Maintainpayroll records.
Beginning of employment
Verify caregiver’s work eligibility
Before your employee begins to work, you need to fill outForm I-9to verify they’re eligible to work in the U.S. The I-9 does not get sent to any government agency but must be presented to authorities if your nanny or senior caregiver’s employment eligibility is ever questioned.
Set up EIN & state tax account(s)
You must first apply for aEIN (Employee Identification Number)with the IRS. This will be used as your unique ID with both state and federal tax authorities. Then you can open an account with your state taxing authority.
Workers’ compensation
Household employers in California are required to carry a workers’ compensation insurance policy to help employees with medical expenses and lost wages from work-related injury or illness. These policies also provide protection to employers. Workers who accept benefits generally forfeit their right to sue the employer, regardless of fault.
Some level of workers’ compensation is usually provided in homeowners insurance. Household employers should contact their insurance provider to see if their current plan is sufficient. If not, an enhancement can usually be added to cover a household employee.
Wage notice
California employers are required to provide all household employees with a written notice at the time of hire and upon any wage changes.
Employment posters
The state of California requires families to share these posters with their employees to notify them of their rights. Your city may also have a similar requirement, so view these local posters as well to see if you need to share additional resources.
During employment
File returns, remit taxes and manage correspondence
- File state employment tax returns throughout the year and remit state employer and employee taxes.
- Remit federal employer and employee taxes via1040-ESestimated tax payment voucher four times each year.
- Each year end, prepare Schedule H and file withForm 1040; prepare and distributeForm W-2to each employee; file Form W-2 Copy A/Form W-3with the Social Security Administration (SSA).
- Manage ongoing alerts and notices from the state (tax rates and labor law is subject to change at any time).
Minimum wage rates
- California state – $16.00/hour
- Alameda: $16.52/hour
- Belmont – $17.35/hour
- Berkeley: $18.07/hour
- Burlingame – $17.03/hour
- Cupertino – $17.75/hour
- Daly City – $16.62/hour
- East Palo Alto – $17.10/hour
- El Cerrito – $17.92/hour
- Emeryville: $18.67/hour
- Foster City – $17.00/hour
- Fremont: $16.80/hour
- Half Moon Bay – $17.01/hour
- Hayward – $16.00/hour
- Los Altos – $17.75/hour
- Los Angeles county: $16.90/hour (does not include Long Beach)
- Los Angeles city: $16.78/hour
- Malibu: $16.90/hour
- Menlo Park – $16.70/hour
- Milpitas: $17.20/hour
- Mountain View – $18.75/hour
- Novato – $16.04/hour
- Oakland – $16.50/hour
- Palo Alto – $17.80/hour
- Pacific Palisades: $16.78/hour
- Pasadena: $16.93/hour
- Petaluma – $17.45/hour
- Redwood City – $17.70/hour
- Richmond: $16.17/hour
- San Carlos – $16.87/hour
- San Diego – $16.85/hour
- San Jose – $17.55/hour
- San Mateo – $17.35/hour
- San Mateo County (unincorporated communities) – $17.06/hour
- Santa Clara – $17.75/hour
- Santa Monica: $16.90/hour
- Santa Rosa – $17.45/hour
- Sonoma – $16.56/hour
- South San Francisco – $17.25/hour
- Studio City: $16.78/hour
- Sunnyvale – $18.55/hour
- Van Nuys: $16.78/hour
- West Hollywood: $19.08/hour
Note: Whenever more than one minimum wage rate applies, employers are required to pay the higher rate.
California overtime requirements
California labor law does not allow household employees to be paid a fixed salary. Overtime pay varies on if your employee resides in your home and whether they are a personal attendant. The state defines a personal attendant as someone who spends at least 80% of their time caring for a child or elderly person. Based on this distinction, California overtime rules are as follows:
- Personal attendant: Must be paid 1.5x their hourly rate for all hours worked over 9 in a day and/or 40 in a 7-day workweek.
- Live-in personal attendant: Must be paid 1.5x their hourly rate for all hours worked over 9 in a day and/or 45 hours in a workweek.
- Non-personal attendant: Must be paid 1.5x their hourly rate for all hours worked over 8 in a workday.
- Live-in non-personal attendant: Must be paid overtime for all hours worked over 9 in a day.
Note: There are additional overtime requirements for non-personal attendant employees that work 12 or more hours in a day or 6 or 7 consecutive days in a workweek. Please call our office for details if this employment situation arises for you.
Mileage reimbursem*nt
California employers must reimburse their employee if they are required to drive their own vehicle on the job. The current federal mileage reimbursem*nt rate is 67 cents per mile and miles driven commuting are not eligible for reimbursem*nt.
Pay stub requirement
California law requires employers to provide employees with a pay stub each payday. It should include the employee’s:
- Hourly rate;
- Hours worked in the pay period;
- Gross wages;
- All deductions taken;
- Net pay.
Paid leave
Disability insurance
The California State Disability Insurance Program (SDI) provides disability insurance and Paid Family Leave benefits to eligible workers who cannot work for non-work-related reasons (i.e. maternity leave, accident, illness). The SDI program is funded by mandatory payroll deductions from your employee’s wages.
Paid sick leave
Household employers in California are required to provide one hour of paid sick time for every 30 hours worked, up to 80 hours each year to their employees. HomePay will track sick time accruals on your account.
- West Hollywood employers must provide up to 96 hours of sick leave per year.
Optional benefits for your employee
Health insurance
Families with only 1 employee can make contributions toward their employee’s health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer are required to pay any taxes on that portion of the compensation.
Families with 2 or more employees have 3 options:
- Set up an Individual Coverage Health Reimbursem*nt Arrangement (ICHRA).
- Set up a Qualified Small Employer Health Reimbursem*nt Arrangement (QSEHRA).
- Purchase a policy through SHOP (Small Business Health Options Program).
Visit our health insurance page for more information about these options.
Ending employment
Termination notice
Household employers in California are required to provide a Change in Relationship Notice to their employee at the time they are fired or laid off.
Managing unused PTO
California household employers do not need to pay their employees unused sick time. However, unused vacation time must be paid out.
Close down your state employment tax account(s)
The state tax agencies expect you to file timely returns for as long as your tax accounts are open — even to report $0 in wages paid.
Maintain payroll records
Household employers are required to keep wage records on file for at least three years.
The information contained in this article is general in nature, may not be applicable to your specific circ*mstances, and is not intended to be a substitute for or relied upon as personalized tax or legal advice.
