Minnesota Household Employer Guide 2026
Your household employee — a nanny, caregiver, housekeeper, or anyone who works in your Minnesota home — is a W-2 employee. Minnesota household payroll includes MN Paid Leave, Earned Sick & Safe Time, workers' comp once the household threshold applies, and city-specific wage or sick leave rules in Minneapolis, St. Paul, and Bloomington.
Start Payroll Free →When the rules apply
Minnesota household employers mainly need to watch federal payroll thresholds, the $1,000 quarterly state UI threshold, the $1,000 quarterly workers' comp threshold, and MN Paid Leave premiums.
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. Nest generates the pay stub, calculates payroll taxes and Minnesota deductions, and registers you with MN DEED and MN Paid Leave when state filings apply.
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.
Minnesota state taxes — quarterly UI + Paid Leave filings
Each quarter, Nest files the Minnesota UI return with DEED and the MN Paid Leave wage report with the Paid Leave Division. UI is employer-paid; Paid Leave includes both the employee share withheld from wages and the small-employer contribution.
Setup checklist (before they start)
The one-time tasks that need to be done before — or shortly after — your household employee's first day. MN has two notice requirements (ESST + Paid Leave) that are easy to miss.
Workers' Compensation Insurance
Under Minn. Stat. §176.041, household workers earning less than $1,000 in a 3-month period from a single private home are exempt from MN's workers' compensation requirement. Once a household worker has earned $1,000 or more in any 3-month period within the prior year, coverage is mandatory going forward. Most regular household employment relationships will cross this threshold.
Workers' comp protects you from liability if your employee gets injured or sick on the job. Without it, you could be personally liable for medical expenses, lost wages, and potential lawsuits arising from a workplace injury — even one as ordinary as a slip in your kitchen or a back injury from lifting a child.
Two paths to coverage
- Homeowner's or renter's insurance rider — call your insurance company first. Many MN policies include or can add household-employee coverage as a low-cost rider.
- Standalone household-employer policy — available from private MN-licensed carriers. Minnesota also runs the Minnesota Workers' Compensation Assigned Risk Plan as an insurer of last resort if no private carrier will offer coverage.
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 optional W-4MN if withholding state income tax)
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.
If you and your employee mutually agree to withhold MN state income tax, your employee fills out the W-4MN form with their MN allowances.
Minnesota New Hire Reporting
Minnesota requires all employers — including household employers — to report newly hired and rehired employees to the Minnesota New Hire Reporting Center within 20 days of the hire date.
Reporting can be done online, by mail, or by fax. You'll provide your employee's name, address, SSN, hire date, and your contact information.
ESST and Paid Leave notices — required at hire
MN requires two written notices to be provided at hire, separate from posters. Both must be in the employee's primary language if other than English (a state-supplied translation in the employee's language satisfies this for the most common languages):
- Earned Sick & Safe Time (ESST) notice — must be given at hire (or by the first day of accrual for existing employees), describing accrual, use, and retaliation protections under Minn. Stat. §181.9445.
- MN Paid Leave (PFML) notice — must be provided to each employee within 30 days of hire (or by January 1, 2026 for existing employees), describing the program, benefits, and contribution responsibilities.
Required Employment Posters
MN employers must provide a number of state-mandated notices to their workers. For a household employer with a single employee, you can satisfy this by emailing or texting the link, or printing and giving them physical copies:
If you employ a worker in Minneapolis, St. Paul, or Bloomington, additional city-specific notices apply — see the city sections below.
Written Work Agreement
Minnesota state law doesn't require a written employment agreement, but the MN Wage Theft Prevention Act (effective 2019) requires employers to provide a written notice of pay rate, payday, and certain other terms at the start of employment and any time those terms change.
A simple work agreement satisfies this notice requirement and 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.
Pay & compensation
Everything that goes into a paycheck — minimum wage, overtime, when to pay, pay stubs, and reimbursable mileage. MN's statewide minimum wage went to a single tier in 2026, and city premiums in Minneapolis, St. Paul, and Bloomington still apply on top.
Minimum Wage — household-typical rate is $11.41/hr (2026)
Minnesota moved to a single-tier statewide minimum wage on January 1, 2026, eliminating the prior large/small employer split. City rates in the Twin Cities area still apply on top.
| Where work is performed | Hourly Rate | Source |
|---|---|---|
| Statewide (default) | $11.41 | Minn. Stat. §177.24 (effective Jan 1, 2026) |
| Minneapolis (single tier) | $16.37 | Minneapolis Min Wage Ordinance (Jan 1, 2026) |
| St. Paul — micro employer (≤5) | $13.25 | St. Paul Min Wage Ordinance |
| St. Paul — small (6–100) | $15.00 | St. Paul Min Wage Ordinance |
| St. Paul — large/macro (101+) | $16.37 | St. Paul Min Wage Ordinance |
| Bloomington (≥6 employees) | $15.00+ | Bloomington ESST Ordinance |
| 90-day training wage (under 20) | $9.31 | Minn. Stat. §177.24 |
Most household employers (1–5 workers) qualify as micro employers in St. Paul ($13.25/hr) and use the statewide $11.41/hr elsewhere. St. Paul's micro-employer rate increases to $14.25 on July 1, 2026, then $15 by July 2027 and CPI-indexed thereafter. Minneapolis indexes its $16.37 rate to CPI annually each January 1.
Overtime
Minnesota's overtime rule combines federal FLSA and a state-specific extra protection for live-in workers:
| Condition | Rate | Source |
|---|---|---|
| Live-out, more than 40 hours in a workweek | 1.5× hourly | FLSA / Minn. Stat. §177.25 |
| Live-in, more than 48 hours in a workweek | 1.5× hourly | Minn. Stat. §177.25 — state-only rule |
| Work performed on a holiday or weekend | No premium required | — |
"No Tax on Overtime" Deduction (2025–2028)
The federal overtime deduction may let household employees deduct the premium portion of qualifying overtime pay on their personal tax return. This is a federal income-tax rule; it does not change how you calculate overtime, FICA, Minnesota withholding, Paid Leave, or payroll records.
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. Under Minn. Stat. §181.101, employers must pay all wages earned by an employee at intervals of at most 31 days, and at least once every 16 days for some industries. Daily, weekly, and bi-weekly are all common for household payroll.
Whatever cadence you pick, designate the regular paydays in writing at hire and stick to them. Even a simple email or text confirming "you'll be paid every Friday" satisfies the requirement, and the MN Wage Theft Prevention Act requires this written notice anyway.
Mileage Reimbursement
Minnesota doesn't require mileage reimbursement, but you must reimburse necessary work-related driving expenses if those costs would otherwise reduce your employee's wages below the minimum wage. Most MN employers use the IRS standard rate:
$0.725 per mile (2026)
Common reimbursable household-employee miles: driving children to activities, running household errands, taking a senior client to medical appointments. (Commuting to/from work doesn't count.)
Paystub Requirements
Under the MN Wage Theft Prevention Act, each pay period you must provide your employee with a written statement showing hours worked, rate of pay, gross wages, deductions itemized, net wages, ESST balance, and (for 2026 onward) MN Paid Leave deduction. Records must be retained for at least 3 years. Pay stubs in St. Paul and Minneapolis must additionally show ESST balance accrued and used.
Minnesota payroll has more moving parts in 2026, but the rules are manageable with the right setup.
Nest Payroll handles federal and MN payroll, the new MN Paid Leave (PFML) deduction, ESST tracking, W-2s, and Schedule H — starting at $42/mo. 14-day free trial.
Time off & leave
Minnesota now has two major paid-leave programs that affect household employers: Earned Sick & Safe Time (employer-funded, since 2024) and the new MN Paid Leave (PFML, state-funded, live January 2026). Both are mandatory.
Earned Sick & Safe Time (ESST) — 48 hours/year
Effective January 1, 2024, Minnesota's Earned Sick & Safe Time law (Minn. Stat. §181.9445–.9448) entitles every Minnesota employee — including domestic workers — to up to 48 hours of paid sick leave per benefit year, accrued at 1 hour for every 30 hours worked. Coverage applies to employees who work at least 80 hours in a year for a Minnesota employer.
Permitted uses include: employee or family member illness, mental or physical health treatment, preventive care, public health emergencies, weather/closure-related school days, time related to domestic abuse or sexual assault, funeral attendance, and arrangements after a family member's death.
Accrual vs. frontloading — and why frontloading is simpler
You have two ways to deliver ESST hours:
Frontloading is generally better for household employers because it avoids per-hour accrual tracking, removes carryover cleanup, and keeps the sick-leave balance simple. ESST does not require payout of unused sick time at separation.
MN Paid Leave (PFML) — state-paid benefits
Effective January 1, 2026, the Minnesota Paid Leave program provides partial wage replacement for qualifying medical, family, bonding, military, and safety leave. Employees file claims with the MN Paid Leave Division; your role is payroll reporting, premium remittance, and confirming employment information when needed.
- Small-employer premium: 0.66% total for employers with 30 or fewer workers — every household
- Employee share: up to 0.44% on covered wages
- Employer share: 0.22%
- Quarterly wage reports: filed with MN Paid Leave starting in 2026
Vacation & PTO
Minnesota does not require paid vacation. If you offer it, document the policy in writing — under MN law, vacation pay is enforceable to the extent your written policy states it will be paid. Without a written cap or "no payout at separation" provision, MN courts may treat accrued vacation as wages owed at separation, so a clear written policy protects you.
City-specific rules (Minneapolis, St. Paul, Bloomington)
Three Minnesota cities have their own minimum wage and / or sick leave ordinances. State law sets the floor; city ordinances apply on top wherever the work is performed within city limits.
Minneapolis — $16.37 minimum wage + Sick & Safe Time
Effective January 1, 2026, the Minneapolis Minimum Wage Ordinance sets a single $16.37/hr rate for all employers (the prior small/large employer split was eliminated this year). The rate adjusts each January 1 by CPI.
The Minneapolis Sick & Safe Time Ordinance requires 1 hour of sick time per 30 hours worked, capped at 48 hours/year, with a balance cap of 80 hours. Pay stubs must show ESST balance accrued and used. Frontloading at 48 hours is allowed and avoids the per-30-hour tracking. For employers with 5 or fewer workers, sick time may be unpaid (though most employers offer paid).
St. Paul — tiered minimum wage + Earned Sick & Safe Time
St. Paul keeps a multi-tier minimum wage based on employer size:
- Macro/Large (101+ employees): $16.37/hr (Jan 1, 2026)
- Small (6–100 employees): $15.00/hr (since July 1, 2025; rises to $16.37 on July 1, 2026)
- Micro (5 or fewer employees) — typical household: $13.25/hr (since July 1, 2025; rises to $14.25 on July 1, 2026)
The St. Paul Earned Sick & Safe Time Ordinance requires 1 hour per 30 hours worked, capped at 80 hours per year (vs. 48 statewide). Pay stubs must show accrual information in the employee's primary language.
Bloomington — Earned Sick & Safe Time
The Bloomington Earned Sick & Safe Time Ordinance mirrors state ESST in most respects: 1 hour per 30 hours worked, capped at 48 hours/year. For employers with 6 or more employees, ESST must be paid; for 5 or fewer (typical household), it may be unpaid (though many household employers offer paid time anyway). Frontloading is allowed.
Upon departure
Final wages — discharged: Under Minn. Stat. §181.13, when an employer discharges an employee, all unpaid wages are due immediately upon demand. If the employee makes no demand, wages are due no later than 24 hours after demand. (MN's discharge rule is among the strictest in the country.)
Final wages — voluntary quit: Per Minn. Stat. §181.14, when an employee voluntarily quits, wages are due by the next regular payday, or within 20 days of the last day of work — whichever is earlier.
Unused vacation/PTO: Vacation pay is enforceable only to the extent your contract or written policy states it will be paid. Without a written policy, MN courts have generally treated accrued vacation as wages owed.
Final W-2: Provide the federal Form W-2 by the regular January 31 deadline (or earlier if requested by the former employee).
Year-end forms
Your responsibilities
- Hand the W-2 to your household employee by January 31 — Nest produces this; you deliver it
- Attach Schedule H to your Form 1040 by April 15 — Nest produces a signature-ready version
What Nest handles for you
- Quarterly federal tax payments to the IRS via EFTPS
- W-3 + Copy A of W-2 filed with the Social Security Administration
- Quarterly UI wage reports with MN DEED
- Quarterly MN Paid Leave wage reports with the MN Paid Leave Division
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 Minnesota household employee legally?
Nest Payroll handles EIN setup, MN DEED + MN Paid Leave registrations, 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. The new MN Paid Leave program (live January 1, 2026), workers' comp household exemption, ESST, and Minneapolis / St. Paul / Bloomington ordinances can be complex — consult an attorney, financial advisor, or licensed insurance broker for your specific situation.