The Benefits of Legal Pay for Nannies
In the Nanny industry, legal pay has always been required, but is often disregarded. While paying under-the-table is perceived to be low-risk in terms of getting caught, the recent pandemic has brought to light the necessity of household payroll for both nannies and families. While it may seem that cash has its advantages, the benefits of legal pay far outweigh cash convenience. Our friends at GTM, Aunt Ann’s preferred household payroll service, have compiled the important benefits and protections of legal pay.
- If you apply for a car loan, student loan, mortgage or even a credit card, you’ll need to show that you can pay monthly installments. Being paid legally provides that. If your pay is not documented, you have no way to show that you have income.
- Getting paid “on the books” creates a work history. This is also important when applying for a loan, credit or your next job.
- Employers are required to pay an unemployment insurance tax. When paying legally, your family (employer) will do the same. If you lose your job, through no fault of your own, unemployment benefits will partially replace your lost wages for up to six weeks while you look for a new job.
- You and your employer will pay Social Security and Medicare taxes. This money is set aside to help pay for living and medical expenses when you retire. If you are paid “under the table,” you don’t receive these benefits and may need to continue working past retirement age.
- The Affordable Care Act requires everyone to have health insurance or pay a fine. A health insurance marketplace has also been created to help people find coverage. If you buy a policy through this marketplace, you could qualify for a subsidy and cut the costs of your insurance. Provided, of course, you are being paid legally.