Workers' Comp for a Nanny: State Rules and Costs

Why this line is different from the rest of the nanny budget

Almost every cost in a nanny arrangement is negotiable. The hourly rate is negotiable. Paid time off is negotiable. A health stipend, a mileage rate, a year-end bonus: all negotiable. Workers' compensation is not. In the states that mandate it, it is a statutory duty attached to the act of employing someone in your home, and it does not care whether you and your nanny both think the arrangement is informal.

What the policy buys is narrow and specific. If your nanny slips on your stairs, strains her back lifting a toddler, or is hurt in a crash while driving your children to swimming, workers' compensation pays her medical treatment and a portion of the wages she loses while she recovers. In exchange, the system is generally the exclusive remedy: she is paid without having to prove you did anything wrong, and she gives up the right to sue you for the injury. Drop the coverage and you drop both halves of that bargain. The medical bills do not disappear, they simply arrive addressed to you, and the exclusive-remedy shield goes with them.

That asymmetry is the reason this page leads with rules rather than prices. A policy on a full-time nanny is a small number. The exposure it retires is not.

The state matrix

States write the household-employee rule in one of four shapes. Some use an hours test, some an earnings test, some a headcount test that only bites when you employ two or more people in the home, and a few simply say every household employee is covered. The shape matters as much as the number: an earnings test can be tripped by a part-time sitter who never comes close to a full week, while a headcount test can leave a genuinely full-time nanny outside the mandate.

The 25 jurisdictions below are the ones whose household rule could be confirmed against a state statute, a state agency source, or two independent industry sources that agreed with each other. States are missing from this table because the rule could not be confirmed to that standard, not because they have no rule. Treat an absence as unknown, never as an exemption.

Rules below are summarized from state statutes and agency material as of August 2026 and are condensed for readability. They are general information, not legal advice, and the operative text is the statute in your state.

Two patterns are worth naming. First, the earnings tests are low. Ohio's is $160 in a calendar quarter and Hawaii's is $225, figures a part-time afternoon sitter clears in a fortnight. If you assumed a threshold implies "only if this is a real job", the threshold states will surprise you. Second, the hours tests cluster at 40 hours a week, which is exactly where a standard full-time nanny sits. A 40-hour schedule in New York, Illinois, Colorado or Utah is on the wrong side of the line by design, not by accident.

Class code 0913, and why the code decides the price

Workers' compensation is priced off a classification code that describes the work, not the job title. For a nanny the code you want on the policy is 0913, which covers domestic workers engaged in household work performed principally inside the residence: cooks, housekeepers, maids, companions, nurses and babysitters. Outside work, chauffeurs and occasional or part-time domestic help sit in neighboring codes with different rates.

The unusual thing about the domestic codes is how they are rated. Most commercial workers' compensation is priced per $100 of payroll, so premium scales smoothly with the wage bill. The domestic codes are commonly rated per capita instead: a flat annual charge for each covered household worker, with a partial charge, often a minimum of a quarter of the annual figure, for someone employed less than a full year. That is why two families paying very different nanny salaries in the same state can be quoted almost the same premium, and why a raise does not automatically raise the policy cost the way it raises your payroll taxes.

It also means the code on your declarations page is worth checking. A household policy written on a general or outside-work classification can be priced off a different basis entirely, and a misclassification discovered at audit or at claim time is an unpleasant surprise in either direction.

What a policy actually costs

A standalone workers' compensation policy for one household employee generally runs in the low hundreds to under a thousand dollars a year. Industry sources put the usual band at roughly $300 to $800, with a full-time nanny typically landing toward the upper end of that range rather than the bottom. Against a $50,000 wage bill, that is somewhere around 0.6% to 1.6% of what you pay the nanny.

Put next to the other statutory costs, it is small. Employer-side Social Security and Medicare alone are 7.65% of cash wages, and unemployment insurance sits on top of that. Workers' compensation is usually the cheapest of the three mandatory lines and the one families most often skip, which is a poor trade.

What moves the number

• Your state. Rates are filed state by state and the spread is wide. The same nanny, the same hours, two states, two quite different premiums.
• Headcount, more than payroll. Under per-capita rating, adding a second household employee is what moves the premium. Raising one person's pay often does not.
• Part-year employment. A nanny hired in September is not a quarter of the price of one employed all year; minimum charges apply.
• Monopolistic state or not. In Ohio, North Dakota, Washington and Wyoming there is no private market to shop. You buy from the state fund at the state's rate, so comparison shopping simply does not exist.

One more cost that is easy to miss: the policy has to be in force before the injury, not after. There is no retroactive purchase, and a lapse of a few weeks between carriers is a real uninsured window rather than a paperwork gap.

This is the part that turns a compliance question into a budgeting question. States do not price non-compliance against the premium you avoided. They price it against time, and in several states the clock runs in 10-day blocks whether or not anyone has been hurt. A household that skipped a policy costing a few hundred dollars can accumulate five figures of exposure over a single school year.

The examples below are the published statutory and agency figures for six states, quoted as the state states them. They are not projections and they are not averages. Enforcement practice against private households differs from enforcement against businesses, and a first-time household case may be handled very differently from a repeat commercial one, but the authority in the statute is the same authority.

Penalty figures below are as published by the named state and are not estimates. They are summarized for readability and can change; verify the current amount with the state agency before relying on it.

Notice what is not in that table: the injury itself. Fines are levied for the state of being uninsured. Separately, an uninsured employer generally ends up personally responsible for the benefits the policy would have paid, which for a serious back injury with months of lost wages is the larger number by a wide margin. New Jersey says this to household employers in plain words, telling them they are personally liable if they fail to insure their employee. Several states also reserve stop-work authority, which reads oddly in a domestic setting but is real statutory power.

"My homeowner's policy covers this" - usually not

This is the single most common wrong assumption in household employment, and the wording of a standard homeowner's policy is what causes it. Most policies include medical payments to others, which pays modest medical bills for someone hurt on your property regardless of fault. Parents read that and conclude the nanny is handled. She is not.

Medical payments coverage is designed for a guest, a neighbor, a delivery driver on your step. It carries a small limit, it pays medical costs only, and it pays nothing toward lost wages or a disability award. Workers' compensation is a wage replacement system as much as a medical one, and that is precisely the half a homeowner's policy does not do. The two are not substitutes at any limit.

Worse, the liability section of a homeowner's policy typically excludes bodily injury to a residence employee where that injury is one the employer is required to cover under a workers' compensation law. The exclusion is written to bite in exactly the situation people expect it to help: your nanny is hurt, your state required a policy, you did not buy one, so the homeowner's carrier declines. The homeowner's policy is most likely to respond when workers' compensation was not required, which is the scenario in which you needed it least.

Some insurers do sell a domestic worker or residence employee endorsement that attaches workers' compensation-style coverage to the homeowner's policy, often for around $100 to $300 a year. It can be a legitimate route, particularly for part-time help, but read the trigger: these endorsements are frequently written to cover only workers below a stated hours threshold, commonly under 40 hours a week, which excludes the full-time nanny most families are actually worried about. New Hampshire is a notable outlier here in requiring homeowner's policies issued in the state to include coverage for residence employees. Everywhere else, assume nothing and ask your agent to point at the endorsement form by name.

Where it sits in the total cost of a nanny

Expressed as a share of the wage bill, workers' compensation is a rounding error next to the wage itself and small next to payroll taxes. On a $50,000 salary, a $300 to $800 premium is roughly 0.6% to 1.6%. Set against that, employer FICA is 7.65%, paid time off is worth a few percent more, and the gap between an advertised hourly rate and what actually leaves your account each month is driven far more by those than by this policy.

So the honest framing is not that workers' compensation is expensive. It is that it is cheap, mandatory in about half the country, and carries a penalty structure that is wildly disproportionate to the premium. It belongs in the budget as a fixed annual line you set up once and renew, sitting alongside payroll tax remittances rather than alongside discretionary benefits.

If you are assembling the full picture, the wage and payroll tax side is worked through in our nanny cost guide, the state-level pay bands are in the 2026 state breakdown, and the credits and pre-tax accounts that claw some of it back are in childcare tax credits. Run the whole thing against a daycare number in the cost calculator before you decide the nanny route is or is not affordable.

A short checklist

1. Find your state in the matrix above, then confirm the current rule directly with the state agency. Rules move.
2. Work out the nanny's real weekly hours and quarterly earnings, including any time you would not instinctively count. New York, for example, counts sleeping and eating time at the residence for live-in help.
3. Call your home insurer and ask specifically whether a residence employee endorsement is available, what hours limit it carries, and whether it pays lost wages.
4. If a policy is required, place it before the first shift and check that it is written on the correct domestic classification.
5. Re-check when anything changes: more hours, a second household employee, a move across state lines, or a nanny share arrangement that alters who the employer is.