Basic daycare contract: what to include, why it matters, and a section-by-section guide

Last updated 2026-07-09

What is a daycare contract and do you legally have to have one?

A daycare contract is a written agreement between a childcare provider and a parent or guardian. It spells out the money terms, the hours of care, the rules both sides agree to follow, and what happens when either side wants to end the arrangement. It is not the same as an enrollment form or a family handbook, though all three can reference each other.

Most states do not require licensed home daycares or centers to use a written contract with families. But every state licensing agency publishes regulations that require providers to document their fee policies and give families written notice of those policies before care begins ^[1]. The cleanest way to meet that requirement is a signed contract.

The Child Care and Development Fund (CCDF), which pays childcare subsidies for low-income families in every state, adds another layer. CCDF regulations at 45 CFR 98.31 require providers accepting subsidy payments to give families written information about fees, including any co-payment or charges beyond the subsidy rate ^[2]. A signed contract is how providers document that disclosure.

So no, skipping a contract is not illegal in most states. But operating without one leaves you exposed. If a parent stops paying, a court wants to see the agreed rate in writing. If you need to end care, a signed notice period protects you. If a licensing inspector asks how families learned your illness policy, a dated contract with a parent signature is the clearest answer you can hand over.

What clauses belong in every basic daycare contract?

These sections belong in every contract, whether you run a home daycare or a center.

Party identification. Full legal names of the provider (and business name if you have one), the parent or guardian, and the child or children. Include the child's date of birth. Courts and licensing agencies need these details if anything is ever disputed.

Care schedule. Days of the week, start time, end time, and any pre-scheduled holidays or closures. Be specific: "Monday through Friday, 7:00 a.m. to 5:30 p.m." beats "full time." If you offer drop-in or part-time slots, define what those mean.

Tuition rate and payment terms. The weekly or monthly rate, when it is due (many providers require payment by Monday morning of the service week), and which payment methods you accept. Spell out whether tuition is owed when the child is absent for vacation or illness. Most experienced providers charge for the reserved spot, not for days attended, and your contract should say so.

Late payment fee. Name a specific dollar amount or percentage. A common structure is a flat fee of $10 to $25 if payment is not received by a set time on the due date, plus a daily fee for each additional day ^[3]. Vague language like "a reasonable late fee" does not hold up in small claims court.

Late pickup fee. State your closing time and the fee for late pickup. Many providers use $1 to $5 per minute after close. Whatever the number, write it down. Parents who have never been charged forget what you said out loud.

Security deposit. A deposit equal to one or two weeks of tuition is standard. Describe exactly what it covers (unpaid final weeks, damages) and the timeline for returning it if those conditions never trigger.

Enrollment and termination notice. How much written notice does each side give before ending care? Two weeks is a common minimum; some providers require four. List the grounds for immediate termination without notice too, such as nonpayment, abuse of staff, or a child's behavior that puts others at risk.

Illness and exclusion policy. Describe the symptoms that require a child to stay home or get picked up: fever above a defined threshold, vomiting, diarrhea, rash of unknown origin. Most state licensing regulations set minimum exclusion criteria, so check your state's rule and match or exceed it ^[1]. A parent who signed a contract with the illness policy in it has no real complaint when you call about a sick child.

Medication administration. Whether you give prescription or over-the-counter medications, and what forms or permissions you require. If you do not give medication at all, say so.

Authorized pickup list. Names and relationships of every adult allowed to pick up the child, plus a statement that you will ask for photo ID from anyone you do not personally recognize. Include a process for adding or removing names.

Media release. Whether you may photograph or video the child for documentation or social media. This sits apart from care but matters enough to include.

Signature and date. Both the provider and the parent sign and date. If two parents share custody, get both signatures if both names are on the enrollment.

What does a typical daycare contract cost to put together?

Writing your own contract costs nothing but time. A family childcare association or your state's Child Care Resource and Referral (CCR&R) agency often gives out sample contracts for free ^[4]. Child Care Aware of America, the national CCR&R network, runs affiliate offices in every state that offer provider support including contract templates.

Hire a local attorney to draft or review one and expect to pay $150 to $400 for a simple one-to-two page agreement, depending on your region. That is a one-time cost, and it is worth it if you plan to run a center or a large family daycare with employees.

Legal document services like LawDepot or Rocket Lawyer charge $7 to $40 per month for template access, childcare agreements included. The templates are fine starting points, but check them against your state's licensing regulations before use, because requirements vary a lot by state.

The real cost of no contract shows up in small claims court. The typical disputed invoice in family childcare runs two to four weeks of tuition. For a provider charging $250 per week, that is $500 to $1,000 at risk. Filing a small claims case costs $30 to $75 in most states, but winning turns on having documentation of what the parent agreed to ^[3].

How do state licensing regulations affect what your contract must include?

Every state regulates licensed childcare differently, and some go well past basic fee disclosure. A few examples show the range.

California's Community Care Licensing Division requires licensed family childcare homes to give parents a written "Child Care Agreement" covering rates, days and hours, holidays, and the provider's absence policy ^[1]. The rule is specific enough that inspectors check for it during annual visits.

Michigan's licensing rules for group home providers require a written agreement signed by both parties before care begins. If you operate or plan to operate in Michigan, the michigan daycare licensing requirements are worth a close read, because Michigan sits among the more prescriptive states on documentation.

Texas requires licensed childcare centers to give parents a written statement of their policies but does not mandate one specific format. Home daycares registered under the Texas Home and Community-Based Services program carry slightly different documentation requirements.

Here is the practical move: look up your state's actual licensing regulations, not a third-party summary. Search "[your state] childcare licensing regulations" and go straight to your state agency's site. The section you want usually sits under "parent agreements" or "enrollment documentation."

One federal floor applies everywhere. If you accept CCDF subsidy payments, 45 CFR 98.31 requires written disclosure of the full price of care and any fees on top of the subsidy co-pay before enrollment ^[2]. Families using the childcare subsidy system need to know exactly what they owe out of pocket, and your contract proves they were told.

How should you handle tuition when a child is absent or the daycare is closed?

This is the clause that starts the most fights. Be precise.

The standard approach for licensed home daycares and most centers is to charge for the reserved slot, not for days actually attended. Parents pay whether the child is sick, on vacation, or a no-show. Your contract should say it plainly: "Tuition is charged for your child's enrolled days regardless of attendance."

For provider-caused closures, the norm flips. Most providers do not charge for days they close for their own illness or personal days beyond a set number. A common approach: the provider takes up to five closure days per year at no charge to families, and additional unplanned closures earn a tuition credit. Whatever your policy, write it in the contract.

Holidays confuse people constantly. List the specific holidays you observe and whether tuition applies. Some providers charge full tuition for all holidays (families pay for the spot); others waive it for the big ones. Either approach works, but the contract has to be explicit.

For center-based care, the National Association for the Education of Young Children notes that most accredited programs bill weekly or monthly regardless of attendance, treating tuition as a seat-reservation fee rather than a per-diem charge ^[5].

What late fees and deposit terms are standard and enforceable?

Late fees are enforceable as long as you disclose them in writing before care begins and they are not so steep that a court calls them punitive. The practical range for family childcare is $10 to $25 for a payment one day late, plus $1 to $5 per day for each additional day unpaid ^[3].

For late pickup, $1 per minute after closing is the rate most cited in provider forums and state CCR&R sample contracts. Some providers step it up to $5 per minute after 15 minutes late. Whatever you choose, enforce it every time. Providers who waive the fee for some families and not others find it nearly impossible to enforce when they finally try.

Security deposits usually equal one to two weeks of tuition. The contract should state four things: the exact dollar amount, that it is held in a separate account or noted as a liability, the specific conditions under which it is forfeited (nonpayment, short notice), and the number of days after the child's last day within which you return it if it is not forfeited. Thirty days is a common and defensible window.

One thing to avoid: calling a deposit a "registration fee" if you plan to return it. If the money is refundable, call it a deposit. If it is not, call it a registration fee and say so. Mislabeling creates a legal gray area you do not want.

How do you write a termination clause that actually protects you?

A termination clause has two parts: notice rules for voluntary withdrawal, and grounds for immediate termination by the provider.

For voluntary withdrawal, require written notice of at least two weeks, ideally four. Specify that tuition is owed for the full notice period even if the child stops attending. Without that line, a family gives Monday-morning notice and refuses to pay for the rest of the week.

For provider-initiated termination with notice, list the situations that warrant it: persistent late payment, repeated late pickup after warnings, failure to complete required enrollment forms, or a change in your capacity. Two weeks is the customary notice you give families in these cases.

For immediate termination without notice, you need a separate list. Common grounds include nonpayment for more than a defined number of days (usually five to seven business days), physical or verbal abuse of staff or other children, false information on enrollment forms, or a child's behavioral needs that exceed what you can safely manage. Courts have consistently upheld immediate-termination clauses that are specific and proportionate.

The drafting rule is simple: the more specific, the more enforceable. "Provider may terminate care at any time" reads as too vague in some jurisdictions and can be struck as unconscionable. "Provider may terminate care immediately and without notice if tuition is unpaid for more than seven calendar days after the due date" is specific and holds up.

How should illness and exclusion policies be written in the contract?

Illness exclusion is where written policy pays for itself fastest. A parent who signed a contract agreeing to pick up a child with a fever above 101 degrees Fahrenheit has no ground to argue when you call them at work.

The contract should name specific symptoms requiring exclusion: fever (state the threshold), vomiting within the past 24 hours, diarrhea more than twice in a day, rash of unknown origin, conjunctivitis (pink eye), or a diagnosed communicable illness. Match or exceed your state licensing regulation's minimum exclusion criteria, because your license is on the line if you admit a sick child against those rules ^[1].

Include a symptom-free return requirement. Most providers require children to be symptom-free for 24 hours without fever-reducing medication before returning. For diagnosed illnesses like strep throat or hand-foot-and-mouth, require a note from a healthcare provider clearing the child.

State clearly what happens if a child gets sick during the day: you call the parent, and they must pick up within a defined window (typically 30 to 60 minutes). Describe how the child stays separated from the group during the wait. Parents who cannot pick up in time should name an emergency backup on the authorized pickup list.

This clause protects you from liability too. If a parent later claims their child caught something at your facility, your signed exclusion policy and attendance log together show you followed a documented protocol.

Should your contract address the childcare tax credit or subsidy payments?

Yes, briefly. Two things belong in or attached to your contract on tax and subsidy matters.

First, include your Tax ID number (your Social Security Number, or your EIN if you have one) and a statement that you will provide year-end payment receipts. Families need your Tax ID to claim the Child and Dependent Care Credit on IRS Form 2441 ^[6]. Providers who make this easy keep families. You can see how the childcare tax credit works from the parent side, which helps you answer the questions families ask at enrollment.

Second, if the family receives a CCDF subsidy or any state child care assistance, the contract should name the subsidy agency, the weekly subsidy payment, and the family's co-pay. Under 45 CFR 98.31, providers must disclose the full price of care and the difference the family owes ^[2]. A line that reads "The state subsidy pays $X per week; the family co-pay is $Y per week; total weekly rate is $Z" satisfies this cleanly.

Do not accept verbal arrangements for subsidy families. The subsidy authorization can change mid-year, and if you never documented the agreed co-pay in writing, disputes about what the family owes get ugly fast.

What mistakes do providers most often make in their daycare contracts?

The most common error is vagueness on money. "A late fee will apply" means nothing in court. "A late fee of $15 is charged if payment is not received by 6:30 p.m. on the Sunday before the service week begins; an additional $5 per day is charged for each day payment remains outstanding" is enforceable.

The second error is not updating the contract when rates change. Raise tuition by email only, and if the parent stops paying the new rate, your only signed document shows the old one. Give families a contract amendment or a fresh contract to sign whenever rates or policies change.

Third: using a contract written for a different state. Termination clauses, deposit refund timelines, and illness exclusion standards all vary by state. A template built for a California provider may collide with rules in Georgia.

Fourth: no severability clause. A severability clause says that if one part of the contract is found unenforceable, the rest stays valid. Without it, a court could void the entire agreement over a single bad line.

Fifth: not keeping copies. Keep a signed copy in your files and hand the parent a signed copy the same day. Date the copy you retain. If you move to digital signatures, use a platform that creates a timestamped audit trail.

ChildCareComp's compliance toolkit includes a provider-ready contract template reviewed against licensing requirements in the most common state scenarios, which saves you the time of building from scratch.

How often should you update your daycare contract?

Review your contract once a year at minimum, at your program's annual enrollment renewal. Any time you change rates, hours, holiday schedule, illness policy, or termination notice period, get a new signature from current families.

State licensing regulations change periodically too. California, for example, issued revised family childcare licensing regulations that took effect in 2021 ^[1]. When your state updates its rules, check whether any new disclosure requirement touches your contract.

For families who have been with you several years, it is easy to let the original signed contract go stale. A simple practice: send a re-enrollment packet each January or at the start of your program year. Include an updated contract, your current rate sheet, and your current family handbook. Have the parent sign the new contract even if nothing changed. A fresh signature on a current document beats an old signature on a stale one.

For providers just getting started, the daycare center overview covers the broader licensing and operational context your contract sits inside.

What is a table of the standard clauses and typical terms?

The table below shows the standard contract sections, what typically goes in each, and notes on enforceability or state variation.

Contract Section	Typical Content	Notes
Party identification	Provider name, parent name, child name and DOB	Required in every state
Care schedule	Days, hours, start date	Be specific; "full time" is not enough
Tuition rate	Weekly or monthly dollar amount	Include whether holidays are charged
Payment due date	Day of week or month	Monday prepay is most common
Late payment fee	Flat fee + daily accrual	$10-$25 flat + $1-$5/day is common [3]
Late pickup fee	Per-minute charge after close	$1-$5/minute; enforce consistently
Security deposit	Amount, refund conditions, refund timeline	Equal to 1-2 weeks tuition
Notice for withdrawal	Written, days required	2-4 weeks is standard
Immediate termination grounds	Nonpayment, abuse, fraud	Be specific; vague clauses are risky
Illness exclusion	Symptoms, return criteria	Must match or exceed state licensing rule [1]
Authorized pickup	Names, ID requirement	Update process matters
Provider closures	Unplanned closure policy, annual limit	Define how many closure days are tuition-free
Subsidy terms	Agency name, co-pay amount	Required under CCDF 45 CFR 98.31 [2]
Media release	Photo/video permission	Optional but recommended
Severability clause	Standard legal language	Protects rest of contract if one clause fails
Signatures	Both parties, dated	Keep a copy; provide a copy

This structure is not exhaustive, but it covers every area where provider-parent disputes most commonly land.

Frequently asked questions

Is a verbal daycare agreement legally binding?

A verbal agreement can be legally binding, but it is very hard to enforce. If a parent disputes the rate, the notice period, or the illness policy, a court works from conflicting testimony alone. Most state licensing agencies also require written fee disclosure before enrollment, so a verbal-only arrangement likely puts you out of compliance with your license regardless of its legal standing.

Can I use a free template I found online for my daycare contract?

Free templates are a reasonable starting point, but check them against your state's licensing regulations before use. Rules for illness exclusion language, refund policies, and notice periods vary a lot by state. Your state's Child Care Resource and Referral (CCR&R) agency often provides templates already matched to your state's requirements, which beats a generic national template.

What happens if a parent refuses to sign a daycare contract?

You can decline to enroll a child whose parent will not sign. A signed contract is a standard business requirement. If a current family refuses to sign an updated contract, treat it as voluntary termination and follow your notice procedures. Do not keep providing care under an unsigned or outdated agreement. The risk of an undocumented arrangement falls almost entirely on you.

Do I need a separate contract for each child in a family?

Not necessarily. Many providers use a single contract listing all enrolled children from the same family, with a combined tuition rate. The contract should name each child individually, with date of birth and enrolled days. If the children have different schedules or rates, a separate line or section for each avoids ambiguity. The point is that the total fee obligation is unmistakable.

How long should I keep signed daycare contracts after a child leaves?

Keep signed contracts for at least three years after the child's last day. In most states the statute of limitations for a contract dispute runs three to six years. Some states require licensed providers to keep enrollment and financial records longer. Check your state licensing regulations for the exact retention rule; California, for example, requires two years of business records to be available for inspection.

Can I charge a registration fee in addition to a deposit?

Yes, but be clear about which is which. A registration fee is non-refundable and covers the administrative cost of enrollment. A security deposit is refundable under defined conditions. If you charge both, name them separately with separate dollar amounts and separate refund terms. Many states allow both; a few limit the total a provider can collect before care begins, so check your state's rules.

Does a daycare contract need to be notarized?

No. Childcare contracts do not need notarizing in any state. A signed and dated document with both parties' signatures is enough. Notarization is an extra layer that confirms identity but is not a legal requirement for a service contract. Keep the process simple so families actually sign before care begins.

What should a home daycare contract include that a center contract does not?

Home daycare contracts often need to cover a few things center contracts skip: the provider's own sick days and backup care (or an explicit statement that no backup exists), the behavior of other adults living in the home, the provider's own children accessing the daycare space, and home-specific rules like shoe removal or pet allergies. Centers have staff redundancy; a home daycare's closure policy is personal and should be spelled out.

How do I handle mid-year tuition increases in an existing contract?

A mid-year increase needs a written amendment signed by both parties, or a new contract. Give families at least 30 days written notice before the increase takes effect. Some providers include a clause in the original contract stating that rates may be adjusted with 30-day written notice, which simplifies things. Without a signed acknowledgment of the new rate, you can only legally collect the rate in the original signed document.

Can I include a photo and social media release in my daycare contract?

Yes, and putting it in writing somewhere is smart. The photo release can be a section of the main contract or a separate form. Be specific: state whether photos may go on social media, in marketing materials, or only internally for documentation. Give families the option to opt out of external sharing while consenting to internal use. This matters most for families in custody disputes or other sensitive situations.

What happens to my daycare contract if a family is on a childcare subsidy?

Your contract with the family still governs the terms of care. The subsidy pays part of the tuition directly to you; the family's signed contract should show the full weekly rate, the subsidy amount, and the family's co-pay. Under CCDF regulations at 45 CFR 98.31, the family must be told in writing of any charges beyond the subsidy co-pay. If the subsidy authorization ends or changes mid-enrollment, the family owes the full contracted rate unless you agree otherwise in writing.

Does my daycare contract protect me from a lawsuit if a child is injured?

A contract alone does not shield you from negligence claims. Liability waivers in childcare contracts are generally not enforceable for injuries caused by provider negligence; courts in most states will not let a parent waive a child's right to compensation for harm. Your contract's illness and safety policies help show you followed a documented protocol, which supports your defense. Adequate liability insurance is the real protection against injury claims.

Sources

1. California Department of Social Services, Community Care Licensing Division, Family Child Care Home licensing regulations: California licensing regulations require licensed family childcare homes to provide parents a written Child Care Agreement before care begins, covering rates, days, hours, holidays, and absence policies.
2. U.S. Department of Health and Human Services, Electronic Code of Federal Regulations, 45 CFR Part 98 (CCDF regulations): 45 CFR 98.31 requires providers accepting CCDF subsidy payments to disclose in writing the full price of care and any fees charged in addition to the subsidy co-payment before enrollment.
3. National Association for Family Child Care, Provider Business Practices guidance: Common late payment fee structures in family childcare are a flat fee of $10-$25 plus a daily accrual charge for each additional day payment is outstanding.
4. Child Care Aware of America, state CCR&R network resources for providers: Child Care Aware of America's state affiliate network provides contract templates and business practice resources to family childcare and center providers at no cost.
5. National Association for the Education of Young Children (NAEYC), accreditation program standards and business practice guidance: Most NAEYC-accredited programs charge tuition on a weekly or monthly basis regardless of attendance, treating tuition as a seat-reservation fee rather than a per-diem charge.
6. Internal Revenue Service, Publication 503, Child and Dependent Care Expenses: IRS Form 2441 and Publication 503 require taxpayers claiming the Child and Dependent Care Credit to report the care provider's name, address, and Tax ID number.
7. U.S. Department of Health and Human Services, Office of Child Care, CCDF Policy frequently asked questions: CCDF policy requires states to ensure families have written information about provider fees and co-payment obligations before childcare services begin.
8. Child Care Aware of America, Price of Child Care annual report: Child Care Aware of America publishes annual data on childcare costs by state and care type, showing median weekly tuition rates for family childcare and center-based infant and toddler care.
9. Texas Health and Human Services Commission, Child Care Licensing standards for childcare centers: Texas requires licensed childcare centers to give parents a written statement of their policies before enrollment; home daycares registered under specific programs have additional documentation requirements.
10. Michigan Department of Licensing and Regulatory Affairs (LARA), Child Care Licensing rules for group family childcare homes: Michigan licensing rules for group home providers require a written agreement signed by both the provider and the parent before care begins.