Answer: están lavando
Explanation: the subjects are manuel and his sister, or ellos/ustedes
for ellos/ellas/ustedes, you would use están
general rule:
yo/I: estoy
tú/you: estás
ello, ella, usted/he, she, they (singular),you(formal): está
nostros, nosotras/we: estamos
ellos, ellas, ustedes/they (plural): están
there is also estáis (vosotros/y'all), but it's used mainly in Spain
