Factors That Go Into Determining a Nanny’s Wage
Hourly Rate vs.. Salary
The Irregular Way Nanny Wages Are Often Negotiated
Blog Posts Related to Wages
Hourly Rate vs. Salary
The common definition of salary is when a person is paid a set amount for a set period (e.g. weekly, monthly, annually) regardless of how many hours are actually worked in that set period. However the Fair Labor Standards Act clearly says that nannies must be paid for every hour they work so nannies are not legally allowed to be paid a salary as it’s commonly defined.
However some pay the nanny a “salary” for a set number of hours each week and then an hourly rate for any additional hours. Many parents like this set-up because they know how much childcare costs will be for most weeks and many nannies like it because they know they’re going to make a minimum amount each week. Technically this is legal because the nanny is being paid for every hour. However the language is very confusing. A clearer way of outlining a nanny’s wages is to list her hourly rate, her overtime rate, and her guaranteed hours.
Under the Fair Labor Standards Act (FLSA), all nannies must be paid at least minimum wage for every hour worked. Some states have a higher minimum wage and in those states, the higher rate applies. More and more cities are passing local laws requiring a higher minimum wage and if you live in one of those cites, the higher rate applies. If you’re unsure of the minimum wage in your area, visit Homepay by Breedlove’s Requirements by State pages.
In nanny markets across the country, minimum wage is below the competitive nanny market rate. In large markets, it’s far below the market rate. So while minimum wage is a legal requirement, hiring a quality caregiver will require a higher wage.
The Fair Labor Standards Act (FLSA) requires that all LIVE-OUT nannies receive overtime for all hours worked over 40 in a work week. Some states have stricter overtime thresholds (e.g. overtime must be paid for all hours worked over 8 in a day) and in those states, the stricter threshold applies.
Some states also require that overtime be paid to LIVE-IN nannies. To get information about your state, visit Homepay by Breedlove’s Requirements by State pages.
Often when a parent hears they’re legally required to pay time and a half for all hours over 40, they go into sticker shock since the typical nanny work week is 45 to 60 hours per week. It’s important to understand that most parents don’t negotiate their nanny’s hour rate based on a 40 hour work week. Instead they negotiate based on her typical work week. That’s makes a big difference. See the next section for more information.
The Irregular Way Nanny Wages Are Often Negotiated
The way most parents and nannies negotiate wages is one of unique things about our industry. Most business employers hire an hourly employee at a certain rate and it’s understood if the employee works more than 40 hours in a week, she’ll receive time and a half. However most nanny employers hire a nanny at a certain rate for all the hours in a work week, generally 45 to 60 hours. It’s understood overtime doesn’t kick in until those hours are worked. This is because parents negotiate based on their childcare budget. Why is this distinction so important? Because it’s the difference between a nanny being paid correctly and incorrectly. And incorrectly leaves the parents open to underpayment wage claims. The good news is that you can negotiate a nanny’s wages based on a typical work week as long as you outline the wages based on a 40 hour work week in your nanny contract. The amount the nanny is paid won’t change. Just the way it’s defined. (The A to Z Nanny Contract helps you navigate defining the nanny’s wages in correct terms. Get the details here.)
Let’s look at an example. A nanny agrees to a $16 per hour for a 50 hour work week. In FLSA terms, the nanny will earn $14.55 per hour for the first 40 hours (regular rate) and $21.82 for the additional 10 hours (overtime rate).
Banking hours is when an employer gives nanny paid time off and then requires the nanny to make up that time at a later date. It’s also commonly referred to as comp time. For example. the parents take Friday off to head to the shore for a long weekend. The nanny is given Friday off with pay and those 9 hours are “banked”. A few weeks later Mom has a late meeting and asks the nanny to stay an extra 2 hours. A few weeks after that Dad asks the nanny to come in an hour early so he can get a run in before work. And then on their anniversary, the parents make plans to go to dinner and a movie and ask the nanny to work a Saturday night from 5:00 to 11:00. Since the family has banked hours, the nanny doesn’t receive any additional pay for these extra hours.
Banking hours is one of those ideas that seems like a good comprise in theory but ends up not working well in the real world. The problem is the nanny has to make up the hours she owes you by working early mornings, late nights, or weekends in addition to her normal schedule. And although intellectually she knows the family has already paid her for that time previously, emotionally she feels she’s getting the short end of the stick. After all, it wasn’t her choice to miss work. She was ready and willing to come in. She just wasn’t needed. And those banked hours take a chunk out of her off time when she could be enjoying her friends and family or even earning additional babysitting income. It doesn’t take long for her to become resentful.
Also banking hours is illegal. A nanny must be paid for every hour she works and paid within the pay period she works the hours in. So an employer can’t pay her in March for hours she’ll actually work in June. Doing that opens up the family to an unpaid wages claim.
When a family provides a nanny with guaranteed hours it means that if the family chooses not use the nanny during her regularly scheduled hours, she’ll be paid for those hours anyway. So if Mom comes home at lunch to spend time with the kids before she leaves on a business trip and she lets the nanny go home early, the nanny will still be paid for those afternoon hours. If the parents leave early Friday morning to get a jump start on a long weekend at the mountains, the nanny will still be paid for the full day. If the whole family goes on vacation for a week in the summer, the nanny will be paid for the full week. Guaranteed hours are a standard benefit in the nanny industry.