Families have a lot to think about when they hire a household employee and we want to make it as easy as possible to find the tax and labor law information they need. Our Pennsylvania nanny tax overview has all the answers for navigating the household employment process. Check out the information below that HomePay is here to help with.*
Checklist for Pennsylvania household employers
We know you’re busy so here’s a quick “to-do” list with links to extra details below.
Beginning of employment
- Verify caregiver’s work eligibility.
- Set up EIN & state tax account(s).
- Obtain workers’ compensation insurance.
- Provide a wage notice.
- Provide an employment contract (Philadelphia only).
- Display employment posters.
During employment
- File returns, remit taxes and manage correspondence.
- Pay at least Pennsylvania minimum wage.
- Pay overtime, when it applies.
- Provide paid sick leave (Pittsburgh only).
- Provide meal and rest breaks (Philadelphia only).
- Provide unpaid sick leave (Philadelphia only).
- Allow a day of rest for live-in employees (Philadelphia only).
Optional benefits for your employee
Ending employment
- Provide a termination notice.
- Manage unused paid time off.
- Close down your state employment tax account(s).
- Maintain payroll records.
Beginning of employment
Verify caregiver’s work eligibility
Before your employee begins to work, you need to fill out Form I-9 to verify they’re eligible to work in the U.S. The I-9 does not get sent to any government agency but must be presented to authorities if your nanny or senior caregiver’s employment eligibility is ever questioned.
Set up EIN & state tax account(s)
You must first apply for a EIN (Employee Identification Number) with the IRS. This will be used as your unique ID with both state and federal tax authorities. Then you can open an account with your state taxing authority.
Workers’ compensation
Household employers in Pennsylvania are not required to get coverage for workers’ compensation insurance, but we recommend all families do so. These policies pay for medical expenses and lost wages if an employee has a work-related injury or illness. Obtain an instant quote and purchase a policy online, or contact our partner, Clarke White, at 804-267-1210 or wcnanny@allrisks.com.
Wage notice
Household employers in Pennsylvania are required to provide their employees with a written wage notice at the time of hire. The notice must include the employer’s address and the employee’s hourly rate of pay.
Families in Pittsburgh should provide their employee with this notice instead.
Employment contract
Families in Philadelphia are required to have a written employment contract that includes the following:
- List of job duties.
- The employee’s hourly and overtime rate of pay.
- An expected weekly schedule, including the total hours worked in a week.
- How the employee will be paid and the payment frequency (weekly, bi-weekly, etc.).
- How meal and rest breaks are handled.
- The paid and unpaid leave the employee has.
- Any paid holidays the employee has.
- Other benefits the family will provide.
- Modes of required transportation.
- Value of housing provided if the employee is a live-in employee.
- Sleeping periods and personal time for an employee that is a live-in.
- The duration of the contract.
- Anything else agreed upon by the family and the caregiver.
- Two weeks notice is required to terminate an employment contract (four weeks if a family has a live-in employee) unless there is significant misconduct by the employee.
Employment posters
Families in Pennsylvania are required to notify their employee of their rights by sharing these posters.
During employment
File returns, remit taxes and manage correspondence
- File state employment tax returns throughout the year and remit state employer and employee taxes.
- Remit federal employer and employee taxes via 1040-ES estimated tax payment voucher four times each year.
- Each year end, prepare Schedule H and file with Form 1040; prepare and distribute Form W-2 to each employee; file Form W-2 Copy A/Form W-3 with the Social Security Administration (SSA).
- Manage ongoing alerts and notices from the state (tax rates and labor law is subject to change at any time.
Minimum wage rate
The current minimum wage in Pennsylvania is $7.25/hour.
Pennsylvania overtime requirements
- Live-out employees must be paid 1.5x their hourly rate for all hours worked over 40 in a workweek.
- Live-in employees are not required to be paid overtime.
- Overtime is not required to be paid when work is performed on a holiday.
Pittsburgh paid sick time
Household employers in Pittsburgh are required to provide up to 24 hours of sick time to their employees each calendar year. Sick time accrues at 1 hour for every 35 hours worked, but employers can offer the full amount of sick time upfront if they choose. Employers are required to roll over up to 24 hours of unused sick time to the next year unless they have chosen to offer the full amount of sick time upfront to their employee. Sick time records must be kept for 2 years and employers must notify their employee of their rights using this poster.
Philadelphia meal and rest break requirement
Employees in Philadelphia are allowed to take an uninterrupted, paid 10-minute rest period for every four consecutive hours they work, and an uninterrupted, paid 30-minute meal break after 5 hours worked. If this is not possible because of the nature of the job, the employee must continue to be paid while they are eating.
Philadelphia unpaid sick time
Household employers in Philadelphia are required to provide up to 40 hours of sick time to their employees each calendar year. The sick time does not have to be paid and accrues at 1 hour for every 40 hours worked. Employees can begin using their sick time after 90 days of employment and may roll over unused sick time to the next year, but cannot accrue more than 40 hours.
Philadelphia time off requirement for live-in employees
Families in Philadelphia with live-in domestic workers cannot require them to work more than six consecutive days without a 24-hour rest period. This time off does not have to be paid, but employees must be allowed to come and go as they please and have no work responsibilities.
Optional benefits for your employee
Health insurance
Families with only 1 employee can make contributions toward their employee’s health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer are required to pay any taxes on that portion of the compensation.
Families with 2 or more employees have 3 options:
- Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
- Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
- Purchase a policy through SHOP (Small Business Health Options Program).
Visit our health insurance page for more information about these options.
Mileage reimbursements
The current federal mileage reimbursement rate is 70 cents per mile and only covers miles driven by your employee while on the job. Miles driven commuting are not eligible for reimbursement.
Ending employment
Termination notice
Household employers in Pennsylvania are required to provide their employee with a termination notice when they are let go from their job.
Managing unused PTO
Pennsylvania household employers do not need to pay their employees for unused sick and/or vacation time.
Close down your state employment tax account(s)
The state tax agencies expect you to file timely returns for as long as your tax accounts are open — even to report $0 in wages paid.
Maintain payroll records
Household employers are required to keep wage records on file for at least three years.
* HomePay can assist with a wide range of the above-listed household tax and payroll needs; however, some state-specific requirements may not be fully supported. Ask a HomePay representative for more information.
The information contained in this article is general in nature, may not be applicable to your specific circumstances, and is not intended to be a substitute for or relied upon as personalized tax or legal advice.
