Many families hiring a nanny to care for their children are stretching their childcare budgets to provide the best, in-home childcare environment for their children. As parents prepare for the financial commitment of hiring a nanny, they often calculate the nanny’s salary in dollars per week or dollars per month terms.
Why should parents bother with offering an hourly wage and keeping track of hours when offering a set salary seems so much easier?
Because by law, nannies are considered “hourly” employees.
Even if the nanny and family are both okay with a weekly or monthly salary wage arrangement, by law, the nanny is considered an hourly employee and must be paid as such.
Since nannies are protected under the Fair Labor Standards Act (FLSA), they are entitled to be paid at least minimum wage for each hour worked. If the state and federal minimum wages differ, the nanny must be paid at the higher rate. Live-out nannies, and live-in nannies in some states, are also entitled to the overtime differential calculated at 1.5 times their base hourly rate for all hours worked over 40 in a 7-day-period.
Even if the family opts to pay the nanny a set weekly salary, the salary must be broken down into the base hourly rate plus the overtime rate and both hourly rates must meet the FLSA standards to be compliant.
Offering a nanny candidate the job on an hourly rate basis both protects the family from wage and hour complaints and provides a basis for computing the occasional overtime that most families will find necessary. It is in the family’s long-term best interest to take the few minutes of additional time and present their job offer with the hourly and overtime rates clearly stated.
If you loved algebra in school, doing the math is easy. For those who are math challenged, HomeWork Solutions, a leading household payroll and tax service, has a free Hourly Rate Calculator available that will both translate your weekly ‘salary’ into appropriate hourly rate terms and provide you with legally (FLSA) compliant language to use in your written work agreement.
Kathy Webb of HomeWork Solutions, a company that specializes in household payroll and has supported hiring families since 1993, offers this advice for families hiring a nanny.
- Document the compensation agreement in the written work agreement, noting both the hourly and overtime pay rates.
- If you need the nanny for 9.5 hours a day, but know there might be an occasional late night, do the hourly rate calculations based on a 10 hour day, and guarantee that weekly amount to the nanny.
- Keep a time card that your nanny signs each week. It does not have to be complicated! A week-at-a-glance calendar kept in a kitchen draw will work well.
- When occasional overtime is needed, pay the nanny for the extra hours.
Nanny taxes can be complicated. HomeWork Solutions (www.4nannytaxes.com) offers free telephone consultations to eNannySource.com families. Give them a call at 800.626.4829 and they will be happy to answer your nanny tax questions. You can also download, “Conquer the Nanny Taxes” a free tip sheet from their site.