California Household Employer Guide 2026
Your household employee — a nanny, caregiver, housekeeper, gardener, or anyone who works in your CA home — is a W-2 employee. Here's everything you need to hire and pay them legally, with current 2026 rates and deadlines.
Start Payroll Free →When the rules apply
Each tax threshold is a trigger. Once you cross one, the corresponding taxes apply to the wages that triggered the crossing — not just the amount above the threshold. California household employers face four key thresholds:
How Nest Payroll handles this
Each pay period, you pay your employee the net amount directly — through Venmo, Cash App, Zelle, your banking app, or by check. We calculate accurate withholdings on every pay stub from day one, so there's never a retroactive scramble when thresholds get crossed mid-year.
At the end of each quarter, we debit your bank account for the taxes owed and remit them to the IRS and California EDD. Your money stays in your account until taxes are actually due. We don't hold withholdings on your behalf.
Setup checklist (before they start)
The one-time tasks that need to be done before — or shortly after — your household employee's first day.
Workers' Compensation Insurance
All California employers are required to carry workers' compensation insurance for on-the-job injuries. For most household employers, this is provided as a rider on your homeowner's or renter's insurance policy — call your provider and ask whether your policy includes coverage for household employees.
The number of hours your household employee works each week may affect whether additional coverage is needed.
Form I-9 (Employment Eligibility)
Federal law requires all employers to verify employment eligibility using Form I-9. Complete this before your household employee's first day of work.
Federal W-4 and California DE 4
The federal W-4 determines how much federal income tax to withhold from each paycheck. Have your household employee fill this out at hire and any time their situation changes.
California also requires a DE 4 (Employee's Withholding Allowance Certificate) for state income tax withholding.
CA Wage Notice
California's Wage Theft Prevention Act requires a written notice at hire and upon any wage changes, covering pay rate, pay day, employer info, overtime rate (if applicable), and more.
Workplace Know Your Rights Act Notice
New for 2026: Starting February 1, 2026, California employers must provide each current and new employee with a stand-alone written Workplace Know Your Rights Act Notice. The notice must be delivered through a regular communication method — in person, by email, or by text. It must be provided annually thereafter to all current employees.
Required Employment Posters
California requires employers to provide these notices to household employees:
Your city may require additional local posters — check your municipality's labor department.
Written Work Agreement
While not legally required beyond the wage notice, a written employment agreement prevents misunderstandings about hours, duties, PTO, and house rules.
Build a free contract with our editable template: Nest Payroll Household Employee Contract Builder — fill it out and download as a PDF.
Hand In Hand, a non-profit supporting domestic employers and employees, also offers free sample contracts and guidebooks.
Background Checks
For child care employees: TrustLine.org is California's only authorized screening program for in-home child care providers, with access to DOJ and FBI fingerprint records.
For elder care employees: the CA Department of Justice provides background check resources.
Nationwide options: eNannySource, NannyVerify.
Pay & compensation
Everything that goes into a paycheck — minimum wage, overtime, when to pay, pay stubs, and reimbursable mileage.
Minimum Wage — $16.90/hr (2026)
California's statewide minimum wage is $16.90/hour effective January 1, 2026. Many cities require higher local minimums — when state and local minimums differ, employers must pay the higher rate.
| City | Rate |
|---|---|
| West Hollywood | $20.25/hr |
| Mountain View | $19.70/hr |
| Sunnyvale | $19.50/hr |
| San Francisco | $19.18/hr |
| Berkeley | $19.18/hr |
| San Jose | $17.95/hr |
| Los Angeles (City) | $17.87/hr |
| San Diego | $17.75/hr |
Overtime
California overtime varies by employee classification and living arrangement. The first thing to determine: is your household employee a "personal attendant" or a general domestic worker?
Quick check: Is your worker a "personal attendant"?
A personal attendant is someone whose duties are primarily direct care — feeding, bathing, dressing, and supervision of a child or adult who needs assistance.
Most nannies who do meal prep, laundry, or run errands fall into the "general domestic worker" category — even if their primary role is childcare. The 80/20 split is strict.
| Condition | Rate |
|---|---|
| More than 9 hours in a day | 1.5× hourly |
| More than 40 hours in a week | 1.5× hourly |
| Condition | Rate |
|---|---|
| More than 8 hours in a day | 1.5× hourly |
| More than 12 hours in a day | 2× hourly |
| More than 40 hours in a week | 1.5× hourly |
| More than 8 hours on 7th consecutive day | 2× hourly |
| Condition | Rate |
|---|---|
| More than 9 hours in a day | 1.5× hourly |
| More than 45 hours in a week | 1.5× hourly |
| Condition | Rate |
|---|---|
| More than 9 hours in a day | 1.5× hourly |
| More than 45 hours in a week | 1.5× hourly |
| First 9 hours on 6th or 7th consecutive day | 1.5× hourly |
| More than 9 hours on 6th or 7th consecutive day | 2× hourly |
"No Tax on Overtime" Deduction (2025–2028)
Under the One Big Beautiful Bill Act (OBBBA), signed July 2025, your household employee may be able to deduct the premium portion of their overtime pay — the "half" in time-and-a-half — from their federal taxable income.
| Detail | Value |
|---|---|
| What's deductible | Only the premium (0.5×) portion of FLSA overtime |
| Max deduction (single) | $12,500/year |
| Max deduction (joint) | $25,000/year |
| Income phaseout | $150,000 MAGI ($300,000 joint) |
| Duration | Tax years 2025–2028 |
Pay Frequency
Under California Labor Code §204, household employers can pay weekly, bi-weekly, or semi-monthly. Monthly pay is not permitted for household workers.
- Semi-monthly: Wages earned the 1st–15th must be paid by the 26th of that month. Wages earned the 16th–end of month must be paid by the 10th of the following month.
- Weekly or bi-weekly: Wages must be paid within 7 calendar days after the end of the pay period.
- Overtime wages must be paid no later than the payday for the next regular payroll period after the one in which they were earned.
Mileage Reimbursement
California law requires employers to reimburse employees for necessary work-related driving (not commuting). Use the current IRS standard rate:
$0.725 per mile (2026)
Common examples: driving children to activities, running household errands, taking a client to medical appointments.
Paystub Requirements
California requires an itemized pay stub with every paycheck, including: gross wages, total hours worked, all deductions, net pay, pay period dates, and employer information.
This is a lot to track on your own.
Nest Payroll handles payroll, tax filings, W-2s, and compliance — starting at $42/mo. 14-day free trial.
Time off & leave
Sick leave, vacation, and California's Disability Insurance and Paid Family Leave programs.
Paid Sick Leave — 5 days / 40 hours (2026)
California requires 5 days or 40 hours of paid sick leave per year (whichever is more for the employee). Sick leave can be used for the employee's own care or a family member's.
Some cities (San Francisco, Los Angeles, Oakland, Berkeley, Emeryville, San Diego, Santa Monica) require additional sick leave on top of the state minimum — check local requirements.
Accrual vs. frontloading — and why frontloading is simpler
California gives you two ways to provide sick leave:
Frontloading is generally better for household employers for three reasons:
- No accrual tracking. You don't need to monitor the 1-per-30 rate or run a true-up at year end.
- No payout on termination. If you frontloaded the full amount, you're generally not required to pay out unused sick time when the employee leaves.
- No carryover. Unused frontloaded time can be reset to 40 hours at the start of each new year, whereas accrued time must carry over up to the 80-hour cap.
- Keep sick time separate from vacation. California vacation is considered earned wages — it cannot expire and must be paid out at separation. If you combine sick and vacation into a single "PTO" bank, the entire balance becomes earned wages and triggers payout obligations on termination, defeating the purpose of frontloading. Track sick time separately.
- Rehire rule. If you let an employee go and rehire them within 12 months, any previously unused sick leave generally must be reinstated to their balance.
Vacation & PTO
Vacation is not required by CA law, but if offered, it's considered earned wages — it cannot expire and must be paid out at separation. This is why we recommend keeping vacation separate from sick leave (see edge case above).
SDI & Paid Family Leave
California requires household employers to withhold State Disability Insurance (SDI) from their employee's wages. SDI funds short-term disability and Paid Family Leave (PFL).
| Detail | Value |
|---|---|
| SDI tax rate (includes PFL) | 1.3% |
| Taxable wage cap | No cap — all wages subject since Jan 1, 2024 |
| Paid by | Employee (withheld from wages) |
| Max weekly DI/PFL benefit | $1,765/week |
Paid Family Leave provides up to 8 weeks of partial pay for bonding with a new child, caring for a seriously ill family member, or military-related duties.
CalSavers Retirement Savings Program
California requires employers with one or more W-2 household employees who don't offer a qualified retirement plan to register with CalSavers or certify an exemption.
How it works
CalSavers is a state-run Roth IRA funded by employee payroll deductions — no employer contributions. After you register and add your household employee's information, CalSavers contacts them directly. If they don't opt out within 30 days, they're auto-enrolled at 5% of wages (auto-increasing 1% per year up to 8%).
You must withhold the deduction each pay period and submit contributions to CalSavers within 7 business days of the pay date.
Upon departure
Final wages: Pay immediately if you terminate your household employee, or within 72 hours if they resign (immediately if they gave 72+ hours notice).
Unused PTO: Accrued vacation is earned wages in California and must be paid out at separation.
Required notices at departure:
- Change in Relationship Form (DE 1101I)
- EDD Unemployment Insurance Pamphlet (DE 2320)
Year-end forms
By the end of January each year, you'll need to deliver:
- W-2 to your household employee — for their personal tax return
- W-3 + Copy A of W-2 filed with the Social Security Administration
- Schedule H attached to your personal Form 1040 by April 15
- DE 9 / DE 9C filings with California EDD (handled quarterly throughout the year)
Tax breaks for household employers
Paying your household employee legally unlocks meaningful federal tax breaks that often offset most of your employer-side payroll tax cost.
Dependent Care FSA (DCFSA)
For 2026, the federal max contribution is $7,500 (married filing jointly) — up significantly from prior years under the OBBBA. Note: your employer's specific plan may still cap at $5,000.
Child & Dependent Care Tax Credit
Up to 50% of qualifying care expenses for 2026 — up from 35% in 2025. Capped at $3,000 of expenses for one qualifying child or $6,000 for two or more. At the 50% rate, a family with two or more dependents could receive a credit of up to $3,000.
→ See our complete guide to nanny tax breaks — includes DCFSA, Care Credit, EAP (Educational Assistance Program), and ICHRA (health reimbursement).
Resources & free tools
Ready to pay your CA household employee legally?
Nest Payroll handles EIN setup, EDD registration, payroll calculations, and quarterly tax filings — all automatically. 14-day free trial.
Disclaimer: The information on this page is general in nature. This is not tax, legal, benefits, financial, or HR advice. Rules and regulations change over time and vary by location. Consult an attorney or financial advisor for your specific situation.