The Fair Labor Standards Act treats people who cook, clean, care for children or elders, garden, drive, or otherwise serve a household as employees entitled to federal minimum wage and, in most cases, overtime. The FLSA domestic service employment rules cover anyone doing household-type work in or around a private home, with a handful of narrow exemptions for companions, casual babysitters, and live-in workers. If you employ someone at your home, or you are that worker, the same rules that govern most workplaces apply here, along with a few that exist nowhere else.
Who Counts as a Domestic Service Employee
A domestic service employee is anyone performing household work in or around a private home. Federal regulations list cooks, maids, housekeepers, nannies, home health aides, personal care aides, gardeners, handymen, and chauffeurs as examples, but the list is illustrative.1eCFR. 29 CFR 552.3 – Domestic Service Employment If the work serves the household rather than a business, and the setting is residential, the worker likely qualifies.
A private home can be a house, apartment, condo unit, or even a hotel room used as a personal residence, and it can be permanent or temporary. A vacation rental a family occupies with a nanny in tow still counts.2eCFR. 29 CFR Part 552 – Application of the Fair Labor Standards Act to Domestic Service The line is drawn at commercial operations: someone doing the same cleaning at a hotel or a boarding house is not a domestic service employee. Neither is a worker helping run a business operated from a home, like an assistant in a home-based law office. The work has to be household in nature.
Employee or Independent Contractor
Before the wage rules matter, you need to know whether the person is your employee at all. Most household workers are. The IRS applies a control test: if you have the right to direct what work gets done and how, the worker is your employee.3Internal Revenue Service. Independent Contractor (Self-Employed) or Employee With a nanny, housekeeper, or home health aide working a regular schedule you set, that right almost always exists.
The IRS looks at behavioral control (do you direct how the work is done), financial control (do you supply materials, set pay, reimburse expenses), and the nature of the relationship (is the arrangement ongoing and central to running the household). No single factor decides it, but for typical household arrangements the factors point to employee status. Treating an employee as an independent contractor means you have not withheld or paid employment taxes, and the IRS can hold you liable for the full amount owed, including the worker’s share.
Minimum Wage and Overtime
Covered domestic service employees must be paid at least the federal minimum wage of $7.25 for every hour worked.4eCFR. 29 CFR 552.100 – Application of Minimum Wage and Overtime Provisions Hours over 40 in a workweek require overtime at one and a half times the regular rate. Live-in employees are the main exception on overtime, addressed below.
State and local law can raise the floor. If your state or city minimum wage exceeds $7.25, that higher rate is what you owe, and the same applies to other wage protections. Whichever law is more generous to the worker controls.5Office of the Law Revision Counsel. 29 USC 218 – Relation to Other Laws Roughly 30 states plus many cities have minimum wages above $7.25, so most household employers are already paying more than the federal floor in practice.
The Companionship Services Exemption
Not every domestic worker is entitled to minimum wage and overtime. The FLSA exempts companionship services, defined as providing fellowship and protection to an elderly person or a person with an illness, injury, or disability.6eCFR. 29 CFR 552.6 – Companionship Services Fellowship covers social engagement like conversation, reading aloud, and accompanying the person on walks. Protection means being present to monitor safety.
The exemption has a hard cap. If the worker spends more than 20 percent of total weekly hours on hands-on care such as bathing, dressing, grooming, feeding, or medication management, they no longer qualify as a companion and must receive full wages and overtime. This is where employers most often get it wrong. If your companion regularly helps someone shower and dress, track the time carefully.
The exemption is available only to individuals or families who directly hire the worker. Home care agencies and other third-party employers cannot use it, even when the worker provides nothing but fellowship and protection.7eCFR. 29 CFR 552.109 – Third Party Employment Agency-employed companions are entitled to full minimum wage and overtime regardless of duties. That rule has been in effect since January 1, 2015.8U.S. Department of Labor. Fact Sheet 79A – Companionship Services Under the Fair Labor Standards Act
If you directly employ a companion who qualifies for the exemption, FLSA wage-and-hour records are not required.9U.S. Department of Labor. Fact Sheet 79C – Recordkeeping Requirements for Domestic Service Workers Under the FLSA Keeping basic hours-and-duties records is still sensible, because if the exempt status is ever challenged, those records are the defense.
The Casual Babysitting Exemption
Babysitting done on a casual basis is exempt from minimum wage and overtime.10eCFR. 29 CFR 552.104 – Babysitting Services Performed on a Casual Basis Casual means the babysitter is not relying on the work as a primary livelihood. As a rough guideline, total babysitting hours across all families staying under 20 per week qualify. Hours above that can still be casual if they are irregular rather than a set schedule. A vacation babysitter whose regular job is not domestic work, brought along on a family trip, can be exempt for up to six weeks.
Two things end the exemption. If more than 20 percent of an assignment involves general housework such as laundry or kitchen cleaning, casual babysitting no longer applies to that assignment. And anyone who babysits as a full-time occupation is never casual, whatever the hours.
Live-In Workers
Domestic employees who reside in the employer’s home must receive at least the federal minimum wage for every hour worked, but they are exempt from overtime.11eCFR. 29 CFR 552.102 – Live-in Domestic Service Employees The exemption applies only when the individual or family is the employer. Home care agencies and staffing firms placing live-in workers cannot use it.7eCFR. 29 CFR 552.109 – Third Party Employment
Sleep Time and Off-Duty Hours
Employer and worker can agree in writing to exclude sleep time, meals, and other periods of complete freedom from duty. That freedom has to be real. If the worker cannot actually leave or is likely to be called back, those hours may still count as work.
Every minute of an interrupted sleep period must be paid. If the worker cannot get at least five consecutive hours of uninterrupted sleep, the entire sleep period becomes compensable.12U.S. Department of Labor. FLSA Hours Worked Advisor Families with a newborn and a live-in nanny should pay close attention to that threshold.
Board and Lodging Credits
An employer can credit the reasonable cost of room and board toward wages, reducing the cash owed. Reasonable cost means the employer’s actual cost, not market rent or an inflated figure, and it cannot include profit.13eCFR. 29 CFR 531.3 – General Determinations of Reasonable Cost The calculation is limited to operating costs, maintenance, and a modest allowance for depreciation and interest. If computed cost exceeds fair rental value, the lower figure controls. The lodging must also be adequate, and the worker’s acceptance genuinely voluntary. Items that primarily benefit the employer, such as uniforms or work tools, cannot be counted.
Tax Obligations for Household Employers
Hiring a household employee triggers federal tax duties many first-time employers do not anticipate. For 2026, you must withhold and pay Social Security and Medicare taxes (FICA) if you pay a household employee $3,000 or more in cash wages during the calendar year.14Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide The combined rate is 15.3 percent, split evenly between you and the employee.
Federal unemployment tax (FUTA) is separate. You owe FUTA if you pay $1,000 or more in cash wages to household employees in any calendar quarter. FUTA applies to the first $7,000 per worker per year. The nominal rate is 6.0 percent, but a credit of up to 5.4 percent for state unemployment taxes typically drops the effective rate to 0.6 percent.
You report and pay these taxes by attaching Schedule H to your Form 1040. If you don’t otherwise file a return, you file Schedule H on its own by April 15.15Internal Revenue Service. Instructions for Schedule H You’ll need an Employer Identification Number, separate from your Social Security number, available online at IRS.gov.
Federal income tax withholding is optional for household employees. You are not required to withhold, but you and the worker can agree to do so, and many workers prefer it to avoid a large April tax bill. Some states impose additional withholding, and a few require disability or paid family leave deductions, so check state rules separately.
Work Authorization and New Hire Reporting
Every employer in the United States, private households included, must complete Form I-9 to verify a new hire is authorized to work. There is no household exemption.16U.S. Citizenship and Immigration Services. I-9, Employment Eligibility Verification Keep the completed form for three years after the hire date or one year after employment ends, whichever is later.
Federal law also requires new hires to be reported to a state directory within 20 days, and some states require faster reporting. The information feeds the National Directory of New Hires, used by child support agencies.17Administration for Children and Families. New Hire Reporting The report covers the worker’s name, address, Social Security number, date of hire, and your EIN.
Recordkeeping
For every covered domestic service employee, the employer must keep records showing the worker’s full name, Social Security number, address, total hours worked each week, total cash wages paid each week, any sums claimed for board or lodging, and any overtime premium paid.18eCFR. 29 CFR 552.110 – Recordkeeping Requirements No particular format is required. A spreadsheet works. The records must be preserved for at least three years.
Live-in employees require more. The employer must keep a copy of the written agreement defining the work schedule and any excluded periods (sleep, meals, off-duty time), along with a log of actual hours worked. If a wage dispute ever reaches the Department of Labor or a courtroom, those records are what determine whether you paid correctly.
What Underpayment Costs
The Department of Labor can pursue back wages for every dollar of underpayment plus an equal amount in liquidated damages, effectively doubling what the employer owes.19U.S. Department of Labor. Back Pay Willful or repeated minimum wage or overtime violations can also trigger civil money penalties of up to $2,515 per violation.20U.S. Department of Labor. Civil Money Penalty Inflation Adjustments Those numbers compound quickly across months or years of employment, which is why the paperwork and hour tracking earn their keep long before any dispute arises.