This post is for general information and isn't legal advice. For guidance on your specific situation, please talk with a California employment attorney who works with household employers.
Paying your nanny on a 1099? Paying cash under the table because it feels easier? Working as a nanny and getting handed a W-9 instead of a W-4? If any of that sounds familiar, this one's for you, because California just raised the stakes on worker misclassification, and the change takes effect January 1, 2027.
We hear about 1099 and cash arrangements more often than you'd think here at Modern Minders, and it almost always comes from a good place. Nobody wants to deal with payroll, and plenty of families know someone who does it the same way. But in California, it's one of the most expensive mistakes a household can make. Below, we'll walk you through what the new law actually says and what it means for you, whether you're a family, a nanny, or an NCS or doula running your own business.
What SB 1444 Actually Changes
Real talk, there's been some confusion about this one, so let's clear it up. The penalties themselves aren't new. California has had a willful misclassification law on the books since 2012, and it carries civil penalties of $5,000 to $15,000 per violation, or $10,000 to $25,000 per violation when there's a pattern or practice of it.
What's new is who gets to go after that money. Governor Newsom signed SB 1444 on August 27, 2026, and starting January 1, 2027, the worker can seek those penalties directly through a wage claim with the Labor Commissioner, with the money paid to the worker. Until now, it was up to the Labor Commissioner or a public prosecutor to pursue it. That means a nanny who was paid as a contractor doesn't have to wait for the state to take an interest in her case anymore, because she can file the claim herself and collect the penalty on top of any unpaid wages or overtime she's owed. (She can recover these damages or a PAGA penalty for the same violation, but not both.)
The key word here is willful, which California defines as voluntarily and knowingly treating someone as an independent contractor to avoid treating them as an employee. So, friendly reminder, once you've read this post, you know.
Why California Takes This So Seriously
California is one of only about a dozen states with a Domestic Worker Bill of Rights, and that's a bigger deal than it might sound. When the major federal labor laws were written in the 1930s, domestic workers were deliberately left out of many of their protections, and it's taken decades of organizing by nannies, housekeepers, and caregivers to close those gaps one state at a time. New York passed the first one in 2010, and California followed with its own law, which took effect in 2014 and was made permanent in 2016.
Under California's law, nannies and other personal attendants working in a private home earn overtime at time and a half once they work more than nine hours in a day or 45 hours in a week (and federal law can kick in at 40 hours for nannies who don't live in). Add minimum wage, paid sick leave, and pay stub requirements on top of that, and it's clear the state sees the people caring for our children as professionals who deserve real protections.
The state backs that up with enforcement, too. In April 2026, the Labor Commissioner cited a Canoga Park placement agency and its owners more than $4.4 million for misclassifying 144 caregivers as independent contractors. SB 1444 is the next step in that same direction, putting more of the power to enforce these rights in the hands of the workers themselves.
For Families: You're the Employer
If you hired your nanny directly, she's your employee, not an independent contractor. If a third-party agency employs her and runs her payroll, she's the agency's employee. For a nanny in California, those are really the only two options.
That second part trips a lot of families up, so let's slow down on it. Modern Minders is a placement agency, which means we help you find the right nanny, but once she starts, you're her employer. The same goes for any placement agency that matches you, collects a fee, and steps away. Pro tip, if you're ever unsure, ask yourself who sends the W-2 at the end of the year. If the answer is nobody, that's the problem.
Being a household employer in California means:
• Running real payroll and withholding and paying employment taxes
• Carrying workers' comp coverage
• Providing accurate pay stubs
• Offering paid sick leave
• Following California's minimum wage and overtime rules for domestic workers
We know that's more work than handing someone a check, but household payroll services are built for exactly this, and once you're set up, it mostly runs itself.
If you've been paying your nanny on a 1099 or under the table, we strongly encourage you to fix it before January 1. Getting set up properly going forward is the most important step, but it doesn't erase what's already happened, so it's worth a conversation with a domestic employment attorney about the time that's already passed. Most of the families we work with weren't trying to cut corners, they just didn't know, and the ones who fix it early sleep a whole lot better.
For Nannies: Know Your Worth and Your Rights
We work with nannies every day, so we'll say this with love. If a family asks you to fill out a W-9 instead of a W-4, that's a red flag, and you're allowed to say so.
We get why a 1099 or cash setup can feel appealing, since the paychecks look bigger without taxes taken out. But being paid as an employee is what gives you:
• Unemployment if a job ends suddenly
• Workers' comp if you're hurt on the job
• Paid sick leave and overtime
• Social Security credits toward your retirement
• Real proof of income when you rent an apartment or apply for a loan
SB 1444 gives you a direct path to hold a family or agency accountable if they knowingly misclassified you, and California law protects workers from retaliation for filing a wage claim. That said, we've found the best first step is usually a calm, honest conversation. A lot of families genuinely don't know they're doing anything wrong, and sharing a post like this one can open the door without anyone feeling attacked.
For NCSs and Doulas: Your Situation Is a Little Different
Newborn care specialists and doulas can work either way. Some are W-2 employees, hired directly by a family or employed by an agency that runs their payroll, while others run their own businesses, often through an LLC, and work with a steady stream of families throughout the year. Both are completely valid, but they come with very different rules, protections, and ways of getting paid, so let's break it down.
If You're a W-2 NCS or Doula
If you're on payroll, you fall under the same California protections as nannies. Caring for a newborn in a family's home generally makes you a personal attendant under the Domestic Worker Bill of Rights, which means you're entitled to:
• At least minimum wage for every hour worked
• Overtime at time and a half after nine hours in a day or 45 hours in a week, which adds up fast on 10 or 12 hour overnight shifts
• Paid sick leave
• Accurate pay stubs and taxes withheld for you, with your employer paying their share of Social Security and Medicare
• Workers' comp if you're hurt on the job
• Unemployment if a job ends
• Protection from retaliation if you speak up about your pay or file a wage claim
The tradeoff is that your employer sets your schedule and directs your work, and your hourly rate is typically lower on paper than what an independent NCS or doula charges, since your employer is covering taxes, insurance, and overtime on the back end.
If You Run Your Own NCS or Doula Business
When you're running your own business, the pay structure looks completely different. Instead of an hourly wage with overtime, you set your own rates, whether that's a flat hourly rate, a per-shift or overnight rate, a day rate, or a package price (like a birth doula package or a set number of postpartum overnights). There's no overtime, because overtime is an employee protection, and your rate simply is what it is no matter how long the shift runs.
That freedom comes with responsibility. As a business owner, you:
• Pay your own taxes, including both the employee and employer halves of Social Security and Medicare (the 15.3% self-employment tax), usually through quarterly estimated payments
• Don't have unemployment, workers' comp, or paid sick leave through your clients, so you need your own insurance and a cushion for slow seasons or sick days
• Cover your own business costs, like insurance, certifications, supplies, and marketing (the upside is that many of these are deductible)
• Get to choose your clients, your rates, and your availability
That's why independent NCSs and doulas typically charge more than their W-2 counterparts. Your rate has to cover everything an employer would otherwise be paying for.
Here's the catch, though. An LLC, a business license, or a W-9 on file doesn't make someone an independent contractor in California on its own. What matters is how the work actually happens, and the state uses the ABC test to decide. All three of these have to be true:
• A. You're free from the client's control and direction in how you do the work, both in your contract and in practice.
• B. The work you do is outside the usual course of the hiring entity's business.
• C. You're customarily engaged in an independently established business doing the same kind of work.
If any one of those falls short, the law treats you as an employee, no matter what your contract says. In that Canoga Park case, the caregivers had even been required to get business licenses, and it didn't change the outcome.
If you're running your NCS or doula work as a true business, it should look and operate like one. That generally means:
• Setting your own rates, policies, and availability rather than having them set for you
• Using your own written contract with each family
• Serving multiple clients and marketing your services to the public
• Holding a business license and carrying your own liability insurance
• Supplying your own tools and resources and deciding how the care is delivered
• Invoicing families and paying your own taxes, including quarterly estimated payments
• Keeping your business finances separate from your personal ones
If a family is setting your hours, your methods, and how you work day to day, that starts to look a lot like employment, even with an LLC in place. Classification here can get nuanced, so if you're not sure your setup holds up, it's worth a conversation with a California employment attorney or a CPA who works with independent care professionals.
A Note for Other Agencies
If your agency employs the caregivers it places, they're your W-2 employees, full stop. That $4.4 million citation we mentioned earlier should be a wake-up call for everyone in our industry, and SB 1444 means the next claim may not come from the state at all. It may come straight from your own caregivers.
The Bottom Line
At Modern Minders, we care about the people on both sides of the nursery door, the families trying to do right by their kids and the caregivers who pour everything into those kids every day. Getting classification right protects everyone. You have a couple of months before the new law takes effect, so now's the time to make sure you're set up the right way.
Have questions about hiring a nanny the right way, or looking for your next role? Reach out to our team, we're always happy to help.
