Nanny shares have become a popular way for families to benefit from in-home care for their children while reducing the costs of a caregiver. But many parents still aren’t sure what goes into organizing a nanny share, or if they’re a good fit for their family. If you’re still new to the concept, here’s what you need to know.

What’s a nanny share?

A nanny share is an arrangement between two (or sometimes more) families who hire a nanny to care for both families’ children at the same time. Nanny shares can be especially helpful for neighbors who are on the same schedule and only have 1-2 children each. These arrangements also have a cost benefit—both families agree to split the cost of child care, while the nanny still receives a fair hourly rate.

If you’re interested in starting a nanny share, here are some things to consider before you jump in.

1. Know what to look for in a nanny share family

A nanny share won’t work with just any family. When thinking about starting a nanny share, ask yourself these questions:

  • Do you share a similar outlook on parenting? Discipline, diet, vaccinations, nap schedule, and more should be considered. This way your nanny can be consistent in how they care for each family’s children.
  • Do you genuinely like the other family? You’ll be working closely together, and if all goes well your nanny share could last for several years.
  • Do your children get along? Each family’s kids will be spending a lot of time with each other. Allow them to get together before starting your nanny share and watch how they interact.
  • Are both family’s children about the same age? Having kids that are similar ages makes it easier for your nanny to schedule activities and coordinate nap times. And if one family’s children are older, they may “age out” of the nanny share before the other family.
  • Do all of the parents get along with each other? How you communicate, respect, and interact with each other may expose some issues that could impact your relationship.

2. Find the right nanny for your arrangement

You’ll want a nanny who has experience with nanny shares and caring for multiple children. Pay close attention to their communication and organizational skills. These will be even more important when working for two different families.

3. Determine a fair hourly wage

Nanny shares are attractive for caregivers as they can earn more money than when they’re working for a single family. In a nanny share, each family typically pays two-thirds of a caregiver’s normal hourly rate.

Nanny share hourly rate example:

Let’s say you’d pay a nanny $20/hour if hiring on your own. Then you and your nanny share family would each pay about $13-14/hour for a total of $26-28/hour. Make sure each family is paying at least minimum wage, which is the highest of the federal, state, and local rates. You’ll also need to pay time and a half for hours worked over 40 in a week.

4. Put together a nanny share work agreement

A work agreement or nanny contract will spell out expectations and responsibilities for your nanny as well the families. Include details like:

  • Work schedule
  • Location of work
  • Hourly pay rate
  • Overtime rate
  • Pay day
  • Job responsibilities
  • Benefits
  • Paid time off
  • Sick time

Review the document with your nanny and have all parties sign the agreement.

5. Understand tax, wage, and labor laws that apply to household employment

Your nanny is an employee, not an independent contractor. That means both families are considered employers and will need to obtain federal employer identification numbers and register as employers with the state. You’ll both pay Social Security and Medicare taxes as well as federal and state unemployment taxes. Each family will provide a W-2 to your nanny and file Schedule H with their own personal tax returns. As mentioned, minimum wage and overtime rules apply. There may also be state- or city-specific rules to follow such as paid sick leave, family leave, or a Domestic Workers’ Bill of Rights.

If you’d rather not deal with the hassles of setting up as an employer, figuring out payroll, and remitting taxes, Sittercity has partnered with GTM Payroll Services to provide a comprehensive nanny payroll and tax service for families. GTM has experience in helping families set up the administrative side of nanny shares and can help you every step of the way.

6. Get workers’ compensation insurance

Worker’s compensation coverage may be required for household employers in your state. If so, each family must purchase a policy. Workers’ comp will help cover a portion of your nanny’s medical bills and lost wages if they get hurt or sick while on the job. If you’re caught without the required coverage, fines can easily reach into the tens of thousands of dollars.

7. Communicate with your nanny share family on a consistent basis

Set aside a regular time to talk with your nanny share family about any concerns, issues with the nanny, and possible changes that could impact the arrangement. Problems with the nanny should be discussed between the families first so you can come to an agreement. That response would then be shared together with the nanny. This helps eliminate any confusion and keeps a clear channel of communication. There are some other tips for communicating with your nanny that will help create a healthy work environment and a happy and engaged employee.

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