Pennsylvania Household Employer Guide 2026
Your household employee — a nanny, caregiver, housekeeper, gardener, or anyone who works in your Pennsylvania home — is a W-2 employee. Pennsylvania payroll is relatively straightforward: a flat 3.07% state income tax, a small employee unemployment contribution, and city-specific rules in Philadelphia and Pittsburgh.
Start Payroll Free →- State: flat 3.07% income tax and a small 0.07% employee unemployment contribution after the PA threshold applies.
- City: Philadelphia and Pittsburgh add household-employer rules, including sick leave and contract requirements.
- Important simplification: household employers generally do not withhold Pennsylvania local Earned Income Tax or Local Services Tax.
When the rules apply
Pennsylvania household employers mainly need to watch three payroll triggers: federal FICA, federal unemployment tax, and Pennsylvania unemployment/state withholding registration.
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 federal payroll taxes, and registers you for Pennsylvania state payroll obligations once the $1,000 quarterly threshold applies.
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.
Pennsylvania state taxes — after the $1,000 quarterly threshold
Once Pennsylvania payroll obligations apply, Nest registers the required state accounts and handles quarterly filings for unemployment contributions and Pennsylvania income tax withholding.
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
Pennsylvania does not require household employers to carry workers' compensation insurance — domestic servants in private homes are specifically excluded from the PA Workers' Compensation Act unless the employer voluntarily elects to provide coverage.
That said, we strongly recommend obtaining coverage. 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 policies include or can add household-employee coverage as a low-cost rider.
- Standalone household-employer policy — available from private carriers (or from the State Workers' Insurance Fund / SWIF) if your homeowner's policy can't cover it.
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 (no separate PA form needed)
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.
Pennsylvania New Hire Reporting
Pennsylvania requires all employers — including household employers — to report newly hired and rehired employees to the Pennsylvania CareerLink New Hire Reporting Program 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.
Notice of Wages at Hire (PA Wage Payment & Collection Law)
Under the Pennsylvania Wage Payment and Collection Law (43 P.S. §260.4), employers must notify each employee at the time of hire of their rate of pay, the regular payday, and the amount of any fringe benefits or wage supplements.
Required Employment Posters
Pennsylvania employers must provide certain 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 Philadelphia or Pittsburgh, additional city-specific notices apply — see the city sections below.
Written Work Agreement
Pennsylvania state law doesn't require a written employment agreement, but a written contract 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.
Minimum Wage — $7.25/hr (2026)
Pennsylvania's minimum wage is $7.25/hour, matching the federal floor. The PA Minimum Wage Act (43 P.S. §333.104) hasn't been raised since 2009, and PA state law preempts cities and counties from setting higher local minimums. Philadelphia, Pittsburgh, and the rest of the state all use the same $7.25 rate.
Overtime
Pennsylvania follows the federal Fair Labor Standards Act (FLSA) standard for household worker overtime: 1.5× the regular hourly rate for all hours worked over 40 in a 7-day workweek. PA does not impose a separate state daily-overtime rule.
| Condition | Rate |
|---|---|
| Live-out, more than 40 hours in a workweek | 1.5× hourly |
| Live-in employees (any hours) | Exempt from overtime |
| 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, or Pennsylvania 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 the Pennsylvania Wage Payment and Collection Law (43 P.S. §260.3), employees must be paid at least semi-monthly unless a contract specifies otherwise. The default schedule is:
- First payment: between the 1st and 15th of the month, covering wages earned through the prior pay period
- Second payment: between the 15th and the last day of the month
You may pay more frequently — daily, weekly, or bi-weekly are all allowed and common for household payroll. Whatever cadence you pick, designate the regular payday in advance and stick to it. Overtime wages can be paid in the next succeeding pay period after they're earned.
Mileage Reimbursement
Pennsylvania 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 employers use the IRS standard rate:
$0.725 per mile (2026)
Common examples: driving children to activities, running household errands, taking a client to medical appointments. (Commuting to/from work doesn't count.)
Paystub Requirements
Under the PA Wage Payment and Collection Law, each pay period you must provide your employee with a statement listing wages, hours worked, rates paid, gross wages, allowances claimed as part of the minimum wage (if any), deductions, and net wages. Records must be retained for at least 3 years.
This is a lot to track on your own.
Nest Payroll handles federal and PA payroll, employee UC withholding, W-2s, and Schedule H — starting at $42/mo. 14-day free trial.
Time off & leave
Pennsylvania does not have a state-mandated paid sick leave law, paid family leave program, or required vacation time. However, Philadelphia, Pittsburgh, and Lehigh County impose their own rules — covered in the city-specific section below.
Paid Sick Leave
Pennsylvania has no statewide paid sick leave law. The state also doesn't run a paid family leave or temporary disability insurance program — there's no PA equivalent of NY PFL, NJ FLI, or MD FAMLI.
That doesn't mean nothing applies. If your employee works in Philadelphia or Pittsburgh, city ordinances require paid (or unpaid) sick leave with specific accrual or frontloading rules. See the City-specific rules section for details.
Even outside those cities, offering some sick leave is good retention practice. A typical household employer offers 3–5 paid sick days per year. Records should be maintained either way.
Accrual vs. frontloading — and why frontloading is simpler
Whether you're complying with a Philadelphia or Pittsburgh ordinance, or simply offering sick leave as a benefit, you have two ways to deliver it:
Frontloading is generally better for household employers because it avoids per-hour accrual tracking, reduces year-end cleanup, and lets the leave balance reset cleanly each year.
Philadelphia and Pittsburgh both allow frontloading as an alternative to accrual tracking.
Vacation & PTO
Pennsylvania does not require paid vacation. If you offer it, document your policy clearly in writing, including whether unused vacation is paid out at separation.
If your policy provides for payout, calculate the earned-but-unused portion through the last day worked at the employee's final rate of pay.
- Keep sick separate from vacation. If you combine sick and vacation into a single "PTO" bank, the entire balance gets characterized as vacation under your written policy — and if your policy says vacation is paid out, you'll owe the full combined balance. Tracking sick separately preserves the option to handle it differently.
- Document forfeiture explicitly if that's your intent. A silent policy can be interpreted as creating a payout obligation. If you want unused vacation to forfeit at year-end or separation, write that into your work agreement at hire — don't rely on silence.
- Vacation pays pro-rata, not the full balance. If your policy provides for payout and you frontloaded 80 hours on January 1, your employee leaving June 30 has earned 40 hours pro-rata (not 80). Subtract any used hours from the earned portion to get the payable amount.
See our Frontload PTO Payout guide for the full pro-rata framework, worked example, and tax treatment.
City-specific rules (Philadelphia, Pittsburgh, Lehigh County)
Pennsylvania's most important household-employer rules sit at the city/county level. Three jurisdictions matter:
Philadelphia — Domestic Workers' Bill of Rights + POWER Act
The Philadelphia Domestic Workers' Bill of Rights (DWBR) was the first city ordinance of its kind. In May 2025, the POWER Act (Protect Our Workers, Enforce Rights) significantly expanded enforcement and aligned domestic worker sick leave with the broader Philadelphia paid sick leave ordinance.
Written contract — required
You must provide a written contract that covers, at minimum: job duties, wages, schedule, payment frequency, breaks, leave provisions, transportation arrangements, and other agreed terms.
Rest and meal breaks
- 10-minute paid rest period for every 4 consecutive hours worked
- 30-minute meal break after more than 5 consecutive hours worked
- Live-in workers: 24-hour uninterrupted rest period after working 6 consecutive days
Termination notice
- Live-out: 2-week notice (or 2 weeks' severance pay in lieu)
- Live-in: 4-week notice (or 4 weeks' severance pay in lieu)
Paid sick leave (POWER Act, May 2025)
Under the POWER Act, Philadelphia domestic workers are now entitled to paid sick leave under the city's Promoting Healthy Families and Workplaces Act, regardless of how many employees you have:
- Accrual: 1 hour of paid sick leave per 40 hours worked, capped at 40 hours per year
- Live-in workers are explicitly covered and protected from retaliation, wage theft, and coercion
- Eligibility: begins after 90 days of employment
- The City is developing a centralized portable benefits system so workers can carry accrued sick time across employers
As an alternative to per-hour accrual, you can frontload all 40 hours at the start of each year (or pro-rated at hire) — this satisfies the ordinance and avoids the per-40-hour tracking. See the state-level frontloading framework above.
A note on Philadelphia city tax
Philadelphia has its own wage/earnings tax system. For most household arrangements, the employee handles any city tax directly if withholding is not set up through the household employer.
Pittsburgh — Paid Sick Days Act (expanded January 1, 2026)
The Pittsburgh Paid Sick Days Act has been in force since 2020 and was significantly expanded effective January 1, 2026. The expansion roughly doubles the required hours and accelerates accrual. Both rules apply to any household employer whose worker performs services within Pittsburgh city limits.
| Employer Size | Annual Cap | Accrual Rate |
|---|---|---|
| Fewer than 15 employees (typical household) | 48 hours/year | 1 hour per 30 hours worked |
| 15 or more employees | 72 hours/year | 1 hour per 30 hours worked |
Carryover and frontloading: Unused accrued time generally carries over into the following year, capped at the 48-hour (or 72-hour) annual maximum. Frontloading the full annual amount at the start of each year exempts you from the carryover requirement.
Lehigh County — Human Relations Ordinance (effective June 1, 2024)
Lehigh County's Human Relations Ordinance applies to any employer with at least one employee — including household employers. It prohibits discrimination based on protected characteristics and adds two operational rules worth flagging:
- Ban-the-box: You may not ask about an applicant's criminal history on an initial application; criminal background may only be considered later in the hiring process and must be job-related.
- Salary history inquiry ban: You may not ask candidates about their prior compensation history. You can (and should) state the wage range you're offering.
Upon departure
Final wages: Under the PA Wage Payment and Collection Law (43 P.S. §260.5), all wages owed to a separated employee — whether terminated or resigning — must be paid by the next regular payday following the separation.
Earned-but-unused vacation: Vacation pay is enforceable only to the extent your written contract or policy says it will be paid out. If your policy provides for payout, calculate the earned-but-unused portion pro-rata through the last day worked at the final rate of pay. Without a written policy mandating payout, PA does not require it. Frontloaded statutory sick leave doesn't have to be paid out (universally true, every state). See Vacation & PTO above and our Frontload PTO Payout guide for details.
Final W-2: Provide the federal Form W-2 by the regular January 31 deadline (or earlier if requested by the former employee).
Philadelphia note: If your worker is in Philadelphia and the DWBR applies, the 2-week (live-out) or 4-week (live-in) termination notice rule may also apply — see the Philadelphia section above.
Year-end forms
Your responsibilities
- Hand the W-2 to your household employee by January 31 — Nest produces this; you deliver it (PA UC employee contribution typically reported in Box 14)
- Attach Schedule H to your Form 1040 by April 15 — Schedule H reconciles the federal taxes Nest already paid quarterly through EFTPS; Nest produces a signature-ready version
What Nest handles for you
- Quarterly federal tax payments to the IRS via EFTPS (FUTA, employer + employee FICA, federal income tax withheld)
- W-3 + Copy A of W-2 filed with the Social Security Administration
- Quarterly UC-2 / UC-2A filings with PA L&I — employer + employee UC contributions, wage detail (after $1k/qtr threshold)
- PA-W3 / REV-1667 reconciliation with the PA Department of Revenue for state income tax withholding (after $1k/qtr threshold)
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 PA household employee legally?
Nest Payroll handles EIN setup, PA Department of Labor & Industry and PA Department of Revenue 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 and vary by location. Workers' compensation, Philadelphia/Pittsburgh ordinances, and paid-leave rules can be complex — consult an attorney, financial advisor, or licensed insurance broker for your specific situation.