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. California stacks state, city, and program-specific rules on top of federal law (mandatory SDI, the country's strongest Domestic Worker Bill of Rights, CalSavers, and city-level minimum wage and sick leave). Here's everything you need for 2026.
Start Payroll Free →- State — voluntary state income tax withholding, mandatory employee SDI/PFL deductions (1.3%, no cap), one of the country's strongest Domestic Worker Bill of Rights, and quarterly DE 9 / DE 9C UI filings.
- City — most major CA cities have their own minimum wage and several (SF, LA, Oakland, Berkeley, Emeryville, San Diego, Santa Monica) have their own paid sick leave on top of the state floor.
- CalSavers — if you don't offer a qualified retirement plan, you must register with CalSavers (or certify an exemption). Penalties for non-registration start at $250/employee.
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, including SDI and any state income tax you've elected. Once you cross the EDD thresholds, we register you with the California Employment Development Department.
California household payroll splits into two flows: a federal flow that's the same in every state, and a state flow that's busier than most because of CA's quarterly EDD filings and the SDI deduction.
Federal taxes — quarterly EFTPS payments
At the end of each federal quarter (March, May, August, December), Nest debits your bank account for the federal taxes owed — FUTA, employer + employee FICA, and any federal income tax withheld — and remits them to the IRS via EFTPS. You'll get a confirmation email a week beforehand. Your money stays in your account until taxes are actually due. We don't hold withholdings on your behalf. At year-end, Schedule H on your Form 1040 reconciles everything Nest already paid through the year; Nest produces a signature-ready version.
California state taxes — quarterly EDD filings
California requires quarterly filings with the EDD throughout the year:
- DE 9 (Quarterly Contribution Return and Report of Wages) — Nest files this with the EDD each quarter, reporting wages and the UI/ETT/SDI/PIT amounts owed.
- DE 9C (Quarterly Contribution Return and Report of Wages — Continuation) — the wage-detail companion form, also filed quarterly by Nest.
- DE 88 (Payroll Tax Deposit) — the payment voucher submitted with the quarterly remittance to EDD.
Nest debits your bank account for the EDD amounts at the end of each calendar quarter and remits with the DE 9 / DE 9C filings. SDI is deducted from your employee's wages on each pay stub; UI and ETT are employer-paid.
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
If your household employee will work regularly — even part-time — plan to have workers' comp coverage in place before they start. California's coverage threshold under Labor Code §3351(d) kicks in once your worker has put in 52+ hours or earned $100+ in cash wages over any 90-day period — and any regular employee crosses both thresholds within the first couple of weeks. So while the strictly technical answer is "below those thresholds, coverage isn't legally required," the practical answer for any ongoing employment is: get coverage from day one.
Workers' comp protects you from personal liability if your employee is injured on the job — a back injury lifting a child, a slip in your kitchen, a car accident on a school run. Without it, you can be on the hook for medical expenses, lost wages, and potential lawsuits.
Two paths to coverage
Start with your homeowner's or renter's insurance carrier first — many policies can add a household-employee rider for a modest premium, which is the cleanest path. If your carrier can't cover it, a standalone household-employer policy from a licensed CA workers' comp insurer is the fallback.
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
Two withholding forms to collect at hire:
- Federal W-4 — determines federal income tax withholding.
- California DE 4 — determines CA 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
Household employees are virtually always hourly under federal FLSA — even when you've agreed to pay a "salary," it's treated as a wage covering a fixed number of hours per week, with overtime owed on hours past 40.
California household employees can be paid weekly, bi-weekly, or semi-monthly — but not monthly. Whatever cadence you pick, designate the regular paydays in writing at hire and stick to them. Under Labor Code §204:
- 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
If your household employee drives their own car for work — to school pickup, the grocery store, doctor's appointments — California law requires you to reimburse them. Most employers pay the IRS standard rate, which bundles fuel, wear, and insurance into a single number.
$0.725 per mile (2026)
Reimbursable miles are anything driven in the scope of the job: children to activities, household errands, a senior client to medical appointments. Your employee's commute from home to your residence does not count. The legal basis is Labor Code §2802, which requires reimbursement of "all necessary expenditures" incurred by the employee in performing job duties.
Paystub Requirements
Under Labor Code §226, each pay period you must provide your employee with an itemized statement showing gross wages, total hours worked, all deductions (including SDI), net pay, pay period dates, and employer information. Records must be retained for at least 3 years. California's pay stub rules are unusually strict — §226 violations carry per-violation penalties up to $4,000 plus attorney's fees, and class-action exposure is real.
This is a lot to track on your own.
Nest handles California payroll calculations, SDI withholding on every pay stub, the quarterly DE 9 / DE 9C filings, federal EFTPS payments, W-2s, and a signature-ready Schedule H — 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 under Labor Code §227.3 and the Suastez v. Plastic Dress-Up Co. (1982) decision — it cannot expire ("use it or lose it" is void), and accrued unused vacation must be paid out at separation, pro-rated through the last day worked, at the final rate of pay. This is why we recommend keeping vacation separate from sick leave (see edge case above).
- Keep sick leave separate from vacation. California sick time under the Healthy Workplaces, Healthy Families Act is not required to be paid out at separation — but vacation/PTO IS. If you combine them into a single "PTO" bank, the entire balance can be characterized as vacation (and forfeiture is void per §227.3). Track them as separate buckets.
- Vacation pays pro-rata at separation, regardless of policy language. If the worker has earned but not used time as of their last day, you must pay it out — there's no enforceable forfeiture provision under California law. A rehire-within-12-months clause is permitted (CalSavers / continuous-service treatment varies).
- Frontloading is allowed and simplifies the math. If you frontload (e.g., grant 80 vacation hours on January 1), accrual is presumed proportional to time worked through the year. Document your accrual basis in writing.
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.
Domestic worker protections
California has the country's deepest body of statutory protections for household workers. Two laws are worth knowing by name.
California Domestic Worker Bill of Rights (AB 241)
The CA DWBR is the reason your nanny or caregiver gets the 9-hour daily and 45-hour weekly overtime entitlements you saw in the overtime tables above. Before 2014, domestic workers were largely excluded from California's overtime rules. AB 241 created the personal-attendant overtime structure (9/45) and is the foundation of every overtime calculation for in-home workers in California.
The DWBR was the first state-level domestic-worker bill of rights in the country (passed 2013, effective 2014) and became a template for similar laws in Massachusetts, Connecticut, Nevada, New Mexico, New York, Oregon, Virginia, Washington, and Illinois.
Statutory reference: California Labor Code §§ 1450–1454. See the Overtime section above for the operational rates.
Domestic Worker Protection Act (SB 1051)
Effective July 1, 2025, SB 1051 extended Cal/OSHA workplace safety standards to private household employers. This is a meaningful shift — household workers were previously excluded from Cal/OSHA jurisdiction. In practice, Cal/OSHA can now investigate complaints from household workers, and household employers fall under the same general workplace-safety duties as other CA employers.
For most households, SB 1051 doesn't require new equipment or major changes — the operational implications are awareness of injury reporting (serious work-related injuries must be reported to Cal/OSHA, generally within 8 hours of the employer becoming aware) and providing reasonable safety information to your worker about hazards specific to your home (cleaning chemicals, ladders, animals, pool chemistry, etc.).
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 are due immediately if you terminate your employee. If your employee resigns, the deadline is within 72 hours of resignation — or immediately if they gave you 72+ hours of notice. This rule comes from Labor Code §§201–202 and is unusually strict by national standards. CA imposes "waiting time penalties" of up to 30 days of wages for late final paychecks.
Accrued vacation must be paid out as wages at separation, regardless of why employment ended — California treats accrued vacation as earned wages under the Labor Code. Frontloaded sick leave generally doesn't need to be paid out (see the edge-cases callout in the sick-leave section).
Final W-2 goes out by the regular January 31 deadline — or earlier if your former employee asks for it.
Required EDD notices at departure:
Year-end forms
The California household-employer tax year closes in two waves: forms by January 31, and Schedule H attached to your 1040 by April 15. Most of the federal tax has already been paid quarterly by the time you file — Schedule H reconciles the year. CA's quarterly DE 9 / DE 9C filings have already been handled throughout the year.
Your responsibilities
- Hand the W-2 to your employee by January 31 — for their personal tax return. CA state income tax withheld appears in Box 17 (if elected); SDI in Box 14.
- Attach Schedule H to your Form 1040 by April 15 — this reconciles the federal taxes Nest paid quarterly throughout the year (FUTA, FICA, any FIT withheld). Nest produces a signature-ready version; you sign and file it with your 1040.
What Nest handles for you
- Quarterly federal tax payments to the IRS via EFTPS — FUTA, FICA, and any federal income tax withheld, debited from your bank account at the end of each federal quarter
- Quarterly DE 9 / DE 9C filings with EDD — UI, ETT, SDI, and any PIT withheld, filed and remitted each quarter
- W-3 + Copy A of W-2 with the Social Security Administration
Bonuses, vacation payouts, and other supplemental wages. Nest uses the aggregate method for federal income tax withholding: bonuses, PTO payouts, and other supplemental wage payments are combined with regular wages and withheld at the worker's regular W-4 rate — not the flat 22% federal supplemental rate. For most household workers, this produces a slightly larger net check than the flat method would. California state income tax withholding (if elected via DE-4) is also computed on the aggregated total at the worker's CA-progressive bracket, which avoids the over-withholding many salaried-bonus payouts produce.
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 handles EIN setup, EDD registration, payroll calculations, the quarterly DE 9 / DE 9C filings, federal EFTPS payments, W-2s, and a signature-ready Schedule H — 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. Workers' compensation, the CA Domestic Worker Bill of Rights (AB 241), the Domestic Worker Protection Act (SB 1051), CalSavers, local minimum-wage and sick-leave ordinances, and Cal/OSHA requirements can be complex — consult an attorney, financial advisor, or licensed insurance broker for your specific situation.