We put a limit of 3 weeks of accrued vacation. I let our nanny know when she is getting close and she schedules some long weekends or a week off. She likes to keep a 2 week balance in case of an illness or family emergency.

OP, does the nanny accrue leave on an x days per week or pay period basis? Most jobs work that way. You should not "reset at three weeks" just because she hits her one year anniversary. In that scenario, you could end up having to cash out a lot of time if the nanny leaves a couple of months into the new year.

If you provide guaranteed hours, it makes sense to limit the nanny's right to rollover time or cash it out. Some nannies with guaranteed hours never use their discretionary vacation time because they know they will get paid time off when the employer vacations, so they use that as their vacation time and treat their discretionary leave like a savings account. There's nothing inherently wrong with that, but parents need to be cautious about allowing the nanny to roll over more time than they would be able to cash out in one lump sum when the relationship ends.

Best to have it in your contract next time, but you can either roll it over or pay it out at the year's end, employer's choice. We rolled ours over because we didn't anticipate our nanny would use it all in one fell swoop anyway (and she hasn't--almost at the end of our 2.5-year stint now and she plans to cash it out and take vacation after the job ends before starting the next one). But if you're concerned about that, it's also reasonable to cash it out. The one thing you can't do (in most states, at least) is just have it expire if it's unused. That's legal to do with sick leave but not vacation.

You should decide if you want to allow any roll over, if not pay it out. Then adjust the contract to your expectations. I have a use it or lose it agreement with my employers.

My employers pay out unused vacation time at the end of each year to avoid rolling over and accruing time beyond the 2 weeks my choice- 1 week their choice (3 weeks total). Its worked well for us and I enjoy the extra cash at the end of each year.

I am allowed to rollover 1 week of unused time. No payout until the job ends. The rest is use it or lose it. If you can't afford for her to use all of her time at once, I would suggest offering to pay some of it out as an incentive not to use it for the sake of using it. Because my time doesn't rollover beyond 1 week, I am sure to use it up.

We allow the rollover of three days to the following year and the rest gets paid out.

Our contract gives our nanny 3 weeks of paid leave per year. It looks like she won't be using most of it. We didn't specify in the contract what would happen with unused leave time. How have other families handled this? Should we just pay her for the unused leave at the end of the year and reset at 3 weeks? I don't want to have her accrue to much leave time because I don't know what we would do if she decided to take like 4 weeks off.