CNM CNM Legal & Employment Standards for Nannies 1 — Questions and Answers
Question 1: In the United States, household employees such as nannies are classified for tax purposes as:
- Employees, not independent contractors, in most circumstances (Correct answer)
- Independent contractors since they work in a private home
- Self-employed individuals responsible for all their own taxes
- Exempt workers not subject to federal tax laws
Correct answer: Employees, not independent contractors, in most circumstances
The IRS uses a behavioral and financial control test to classify nannies as employees in most households, meaning families must withhold and pay employment taxes.
Question 2: What is the 'nanny tax'?
- Federal and state payroll taxes (Social Security, Medicare, unemployment) that families must pay when employing a household worker (Correct answer)
- A tax credit families receive for employing a nanny
- A licensing fee paid by nannies to work legally in the US
- A flat income tax rate applied exclusively to nanny earnings
Correct answer: Federal and state payroll taxes (Social Security, Medicare, unemployment) that families must pay when employing a household worker
The 'nanny tax' refers to the employer payroll tax obligations that arise when a family pays a household employee above the IRS threshold.
Question 3: Under the Fair Labor Standards Act (FLSA), live-out nannies are generally entitled to:
- Minimum wage and overtime pay at 1.5x for hours worked over 40 per week (Correct answer)
- A flat weekly salary with no overtime requirement
- Overtime only if earning below poverty level
- Minimum wage but no overtime protections
Correct answer: Minimum wage and overtime pay at 1.5x for hours worked over 40 per week
The 2015 FLSA domestic worker rule extended minimum wage and overtime protections to most live-out domestic workers including nannies.
Question 4: What document must a family provide to a household employee upon hiring to comply with IRS requirements?
- Form W-2 by January 31 of the following year (Correct answer)
- Form 1099 by February 15
- Form I-9 only, with no additional IRS paperwork
- A written employment contract filed with the IRS
Correct answer: Form W-2 by January 31 of the following year
Household employers are required to issue Form W-2 to employees who met the annual wage threshold, reporting wages and withheld taxes.
Question 5: Form I-9 is required in nanny employment because it:
- Verifies an employee's identity and legal authorization to work in the United States (Correct answer)
- Documents the nanny's educational credentials
- Establishes the employment contract terms between nanny and family
- Records the nanny's tax withholding preferences
Correct answer: Verifies an employee's identity and legal authorization to work in the United States
Form I-9 is a federal employment eligibility verification form required for all US employers, including household employers.
Question 6: Which federal law prohibits employment discrimination based on race, color, religion, sex, or national origin in workplaces with 15 or more employees?
- Title VII of the Civil Rights Act of 1964 (Correct answer)
- The Fair Labor Standards Act
- The Family and Medical Leave Act
- The Americans with Disabilities Act
Correct answer: Title VII of the Civil Rights Act of 1964
Title VII prohibits workplace discrimination based on protected characteristics; though it applies to employers with 15+ employees, its principles guide ethical nanny employment practices.
CNM CNM Legal & Employment Standards for Nannies 1
In the United States, household employees such as nannies are classified for tax purposes as: