When a nanny files for unemployment after leaving their role in your home, the unfamiliar territory can feel a bit intimidating. Regardless of why the position ended, maybe because your childcare needs changed, your nanny moved on, or the relationship didn’t work out, getting a claim notice in the mail can raise a lot of questions. 

The good news is that when a nanny files for unemployment and everything is handled above board, the process is usually straightforward for families. Here is exactly what you need to know.

1) When Is a Nanny Eligible for Unemployment Benefits?

Like most employees, a nanny is eligible for unemployment benefits when they are let go for reasons outside their control. This includes situations where:

• You no longer need childcare because your children started school, you changed your schedule, or your family moved
• The position was eliminated for any reason not related to the nanny’s performance
• The nanny was laid off due to financial changes in the household

A nanny is generally not eligible if they voluntarily resigned, unless they can demonstrate they were forced to leave due to intolerable working conditions, such as harassment or discrimination. They are also not eligible if they were terminated for cause, meaning a documented performance issue or violation of their employment agreement.

2) What Happens After a Nanny Files for Unemployment?

When a nanny files for unemployment, the state mails a claim notice to you as the employer of record. This notice will include:

• The name of the former employee who filed
• The reason for the separation, as reported by the claimant
• A deadline by which you can respond or provide additional information

You are not required to respond if you have no objection to the claim. The state unemployment office reviews the facts and makes the final eligibility determination. In most cases where the separation was amicable, and payroll taxes were paid correctly, families can simply acknowledge the notice and move on.

3) Can You Refute the Claim?

Yes. If your nanny was terminated for cause and you believe they are not eligible for benefits, you have every right to contest the claim within the deadline specified in the notice. To do so effectively, you will need documentation. This is where good recordkeeping pays off.

Useful documentation includes:

• Written records of performance issues or incidents leading up to termination
• Any written warnings or performance improvement plans you issued
• A copy of the written termination notice (required by California law)
• Your nanny’s work agreement or contract, which can help establish the terms of employment

California is one of several states that requires employers to provide a written notice of termination. Keep a copy for your records. 

4) Who Actually Pays for Unemployment Benefits?

Unemployment benefits are funded through the payroll taxes that families pay as household employers throughout the employment period, not as a separate bill when a claim is filed. If you were paying your nanny legally and remitting the required taxes, the state pays your former nanny directly, and you will not receive an invoice.

Here is a quick breakdown of the relevant 2025 tax thresholds:

• Federal Unemployment Tax (FUTA): Owed if you paid $1,000 or more to household employees in any calendar quarter. The rate is 6% on the first $7,000 of wages per employee, though a credit of up to 5.4% applies if state unemployment taxes are paid on time, bringing the effective federal rate down to as low as 0.6%.
• California State Unemployment Insurance (SUI): The new employer rate in California is 3.4% on the first $7,000 of each employee’s wages. Employers with a prior history may have a different rate.

If you were paying your nanny under the table and not remitting payroll taxes, your nanny would not be eligible for unemployment benefits, and you could be liable for back taxes, penalties, and interest. Paying legally protects both parties.

5) Will This Affect Your Tax Rate?

For most families, having a former nanny file for unemployment has little to no financial impact. If you do not hire another household employee after parting ways with your nanny, your unemployment tax rate is unaffected entirely.

If you go on to hire a new caregiver, your state unemployment insurance rate could increase slightly based on your claims history. In California, this rate typically ranges from 3.4% for new employers up to a higher rate for those with prior claims activity. Significant jumps are uncommon, and the adjustment, if any, applies only to the first $7,000 of your new employee’s wages.

6) What About Workers’ Compensation Insurance?

Workers’ compensation rates are calculated based on the classification of the work being performed and any prior bodily injury claims you have filed, not on unemployment claims. A nanny filing for unemployment has no effect on your workers’ compensation insurance rates whatsoever.

That said, it is worth noting that California requires all household employers to carry workers’ compensation coverage. If you have a full-time nanny, make sure they are added to your policy. Many families are able to add a household employee as a rider on their existing homeowners’ or renters’ insurance policy.

7) The Best Protection: Good Records from Day One

The single most effective thing a family can do to navigate the situation smoothly when a nanny files for unemployment is to have clean, well-organized employment records before it ever comes up. That means:

• A signed nanny work agreement that clearly outlines the terms of employment, responsibilities, pay, and expectations
• Accurate payroll records, including pay stubs, W-2s issued by January 31 each year, and documentation of all taxes remitted
• A written record of any performance conversations or incidents, even informal ones, noted at the time they occurred
• A written termination notice is kept on file, as required under California law

When a nanny files for unemployment and everything is handled professionally, it truly does not have to be a stressful experience. Think of it as something that helps your former nanny bridge the gap while they find their next great opportunity, and a reflection of the professional, above-board employment relationship you built together.

Please note: Westside Nannies is a referral agency and is not a tax professional or legal advisor. For guidance specific to your situation, please consult a qualified tax or legal professional.

Found this helpful? Check out our other articles:

• Filing Taxes as a Nanny Employer: Avoid Costly Mistakes and Stay Compliant in 2026
• Understanding Nanny Workers Comp Insurance for Household Employers
• How to Navigate Nanny Contracts and Avoid Misunderstandings