As a nanny agency owner, you are a consultant, a matchmaker, and a trusted advisor to both families and caregivers. One of the most important, and sometimes trickiest, conversations you’ll lead is the transition from “cash under the table” to professional, legal employment.
While some clients or candidates may initially hesitate about being paid “on the books,” framing the conversation around professional standards, long-term security, and meaningful tax savings can turn a potential hurdle into a real value-add. Here’s how to navigate these conversations and address common objections.
Educating Nanny Candidates
For many caregivers, the biggest concern with legal pay is the “smaller” paycheck after taxes. The key here is shifting the conversation from weekly take-home pay to total compensation and long-term stability.
- Master the Language of “Gross vs. Net”
Early in the intake process, help candidates get comfortable negotiating using gross wages (before deductions) rather than net pay (take-home pay).
- Gross Wages: The industry standard and the true reflection of an hourly rate.
- Net Wages: This varies based on personal tax situations or contributions, which makes it an unreliable foundation for an offer.
- Highlight the “Professional Safety Net”
Many nannies don’t realize that legal pay is really an investment in their own future. Ground the conversation in tangible benefits:
- Verifiable Income: Pay stubs and W2s make it possible to rent an apartment, finance a car, or qualify for a mortgage.
- Unemployment & Disability: If a role ends unexpectedly, legal pay ensures access to unemployment benefits – and in some states, paid family or medical leave.
- Retirement Security: Contributions to Social Security and Medicare (matched by the employer) help support long-term financial and health stability.
- Reduced Healthcare Costs: Nannies paid legally may qualify for subsidies through the health insurance marketplace.
Empowering Families
Families often hesitate due to perceived cost or administrative hassle. In reality, it’s easy to reframe compliance as both a smart financial decision and a way to protect their household.
- Leverage Tax Breaks to Offset Costs
Many families are surprised to learn that tax savings can significantly reduce, if not fully offset, the cost of employer taxes.
- Dependent Care FSA: Families can save up to $3,000 per year by using pre-tax dollars through an employer-sponsored FSA.
- Child & Dependent Care Tax Credit: The credit can be as much as 50%, but most families will see a 20-35% savings on expenses up to $3,000 for one child or $6,000 for two or more. This means families can expect to save up to $1,050 if they have one child and up to $2,100 if they have two or more children.
- Risk Mitigation and Liability
Paying “under the table” leaves families exposed in ways they often haven’t considered.
- Workers’ Compensation: If a nanny is injured on the job and there’s no coverage, the family is typically responsible for medical costs and lost wages. Legal pay usually includes this protection.
- Audit and Penalty Risk: If a nanny later reports income (for unemployment or a loan), unreported wages can trigger back taxes, interest, and penalties.
Overcoming Common Objections
When a candidate or family pushes back, these responses can help reframe the conversation around their best interests:
Nanny: “I need more cash in my pocket right now.”
Response: “I hear you – but being paid legally is what helps you reach bigger goals, like buying a car or a home. Without a W2, your income is essentially invisible to lenders.”
Family: “It’s too expensive to pay the extra taxes.”
Response: “Totally fair concern. But when you factor in the Dependent Care FSA and available tax credits, many families see a large portion, if not all, of those employer taxes come back to them.”
Nanny: “I’ve never been paid on the books before – why start now?”
Response: “Going on the books protects you. If a role ends unexpectedly, you’ll have unemployment benefits to rely on while you search for your next position.”
Family: “The paperwork is too complicated.”
Response: “It can feel that way at first. That’s why we always recommend working with a household payroll specialist who handles the filings and keeps everything compliant for you.”
The Big Picture
At the end of the day, legal pay sets the foundation for a strong, long-term working relationship. When a nanny feels respected as a professional – and supported by a real safety net – they’re more likely to stay and grow with a family. That consistency is exactly what families are hoping for when they partner with an agency.
By guiding both sides through this conversation, you’re doing more than facilitating a placement – you’re helping build a sustainable, professional environment that reflects the standards of your agency and the industry as a whole.
Contact HomePay to help build a strategy for introducing legal pay during your placement process:
🖥️https://partnership.myhomepay.com
📲877-367-1969
📤partners@myhomepay.com
Alyssa Sable is HomePay’s Partner Relations Specialist, bringing years of experience with the company, including time on the award-winning Client Service team. Her favorite part of her role is building confidence around nanny taxes and payroll while creating warm, lasting connections in the process. Based outside of Austin, Texas, she spends her free time cooling off with her two dogs, Audrey and Mavis.