Hiring a Nanny in Scottsdale, Arizona: A Complete Guide to Laws, Payroll, and Tax Compliance

Hiring a nanny in Scottsdale is about more than finding someone loving and trustworthy—it also means becoming a household employer. With that title comes important responsibilities, including understanding Arizona employment law, managing taxes, and handling payroll legally and professionally.

If you’re preparing to hire a full-time nanny, part-time caregiver, or even a family assistant in Scottsdale, this comprehensive guide will help you stay compliant and confident.

Step 1: Understand Employment Classification

Under both federal and Arizona law, nannies are considered household employees, not independent contractors. That means you—the family—are the legal employer and must follow employment regulations, including tax withholding, wage reporting, and recordkeeping.

Misclassifying your nanny as a contractor (1099) to avoid taxes can result in IRS penalties and back payments. It’s simply not worth the risk.

Step 2: Arizona Minimum Wage & Labor Laws

Minimum Wage (2025)

• Arizona’s minimum wage is currently $14.35/hour as of January 2025.

• Most nannies in Scottsdale earn $25–$35/hour, especially if they have experience, certifications (CPR, First Aid), or added duties like cooking or driving. Expect increased rates for more qualified candidates.

Overtime Pay

• Under the Fair Labor Standards Act (FLSA), nannies must be paid 1.5x their regular hourly rate for any hours worked over 40 in a workweek—unless they are live-in employees.

• Live-in nannies are typically exempt from federal overtime pay requirements.

Meal & Rest Breaks

• Arizona does not have specific laws requiring breaks for household employees, but offering a lunch break or rest time is a best practice.

Sick Leave

• Arizona law requires that household employees accrue 1 hour of paid sick time for every 30 hours worked, up to 24 hours per year for small employers (under 15 employees), or 40 hours for larger employers.

Time Off & Holidays

• Not legally required, but many Scottsdale families offer:

  • 2+ weeks of paid vacation

  • 5–7 paid holidays (New Year’s, July 4th, Thanksgiving, etc.)

  • 3–5 paid sick days in addition to the required minimum

Step 3: Payroll & Tax Responsibilities in Arizona

Register as a Household Employer

• Federal: Apply for an EIN (Employer Identification Number) through the IRS.

• State of Arizona: Register with the Arizona Department of Economic Security (DES) for unemployment insurance (SUI) and wage reporting.

Complete Form I-9

• Confirm your nanny is eligible to work in the U.S. and retain documentation.

Withhold and Pay These Taxes

1. FICA (Social Security & Medicare):

   • Withhold 7.65% from your nanny’s paycheck

   • Match an additional 7.65% as the employer

2. Federal Unemployment Tax (FUTA):

   • Pay 6% on the first $7,000 of wages (may be reduced to 0.6% with state compliance)

3. Arizona State Unemployment Insurance (SUI):

   • Paid by employer; rates are assigned by the Arizona DES

4. Federal Income Tax:

   • Withholding is optional unless your nanny requests it via Form W-4

5. Arizona State Income Tax:

   • Required to withhold if your nanny fills out Form A-4 (Arizona’s version of the W-4)

Provide Required Forms & Documents

• W-2: Issue to your nanny by January 31

• Schedule H: File with your personal tax return (Form 1040)

• Quarterly Reports: Submit state unemployment and wage reports as required

Helpful Tip: Consider using a household payroll service to automate withholdings, filings, and reports. It saves time—and avoids mistakes.

Step 4: Write a Legally Sound Nanny Contract

A detailed employment agreement helps prevent confusion or conflict. At a minimum, your nanny contract should include:

• Job title and responsibilities

• Weekly schedule and expected hours

• Hourly wage and overtime terms

• PTO, sick leave, and holiday policies

• Mileage reimbursement if applicable

• Use of household vehicle or child transportation terms

• Confidentiality or NDA clauses (especially in high-profile households)

• Termination policies and notice requirements

Step 5: Offer Competitive Benefits

To attract top-tier Scottsdale nannies, consider offering:

• Guaranteed hours

• Paid holidays and vacation

• Health insurance stipends

• Education or training reimbursement (e.g. CPR recertification)

• Year-end performance bonuses

Step 6: Finding the Right Nanny in Scottsdale

At The Natural Nanny Collective, we specialize in matching Scottsdale families with experienced, compassionate caregivers. Whether you’re looking for a ROTA nanny, a Montessori-aligned caregiver, or a family assistant to juggle logistics and littles, we handle every step: interviews, background checks, contract support, and more.

Final Thoughts

Hiring a nanny in Arizona means stepping into the role of an employer—but with the right guidance and structure, it’s a smooth and rewarding experience. By staying legally compliant, honoring your caregiver’s time and talent, and putting strong systems in place, you set the foundation for a happy and lasting working relationship.

Need help getting started? The Natural Nanny Collective is here to support you every step of the way. Fill out our family application to get started!

*And remember: while this guide covers the essentials, it’s not a substitute for legal or tax advice. Always consult a tax professional or employment attorney to ensure you’re fully compliant with both state and federal law.