Benefits: Should A Nanny Lose Money When Taking A Paid Holiday?

Over the past few years as more and more employers include paid holidays in their benefit package, the confusion over how paid holidays work in the real world has grown.  With July 4th happening this week, it’s a perfect time to tackle this challenge.  So let’s look at two big questions.

How many hours are nannies paid for when they receive a paid holiday?
It’s standard that paid holidays are paid based on the nanny’s typical schedule.  But since “typical schedule” can be confusing in our industry let’s look at some examples.

If the nanny normally works 10 hours a day Monday through Friday, she should receive 10 hours of pay for each paid holiday.

If the nanny normally works 10 hours a day on Mondays and Tuesdays and 6 hours a day on Wednesdays and Thursdays, she should receive 10 hours of pay for holidays that fall on Mondays or Tuesdays and 6 hours of pay for holidays that fall on Wednesdays or Thursdays.  If the holiday falls on a Friday, the nanny wouldn’t receive any extra pay because it’s not a regularly scheduled work day.

If the nanny works a variable schedule, the employers and nanny need to agree on how many hours define a paid holiday as part of the contract negotiation.  Some split the difference; for example if the nanny typically works 8 to 11 hours a day, a paid holiday is defined as 9.5 hours.  Others look at the past month and calculate the average number of hours worked in a day and use that number to define an upcoming paid holiday.  It doesn’t really matter what formula you use as long as both sides agree to the same formula and the details are clearly spelled out in your nanny contract.

Now I know for many your next question is “Is paying based on the typical schedule legally required?”  Since providing paid holidays isn’t legally required, there aren’t any legal requirements for defining the number of hours a nanny should be paid for that holiday.  However industry standards – what the majority of employers provide and what the majority of qualified nannies require – say the nanny’s paid based on her typical schedule.    I’m seeing more and more employers defining a paid holiday as 8 hours, a typical workday for most outside the nanny world.  That’s shortchanging the nanny unless her typical schedule is 8 hours a day.  A nanny should never lose money by taking paid time off.

Do paid holiday hours count towards the week’s overtime threshold?
This one has two answers, the legal requirement and the industry standard.  Let’s start with what’s legally required.  Legally employers don’t have to count hours from a paid holiday towards the overtime threshold because those hours aren’t actually worked.  However the industry standard is that hours from a paid holiday do count.  Why?  Again, a nanny should never lose money by taking paid time off.

Let’s look at an example.  A nanny works 10 hours a day, 5 days a week.  Her regular rate is $15 an hour and her overtime rate is $22.50 an hour.  In a typical week she earns $825, $600 in regular wages and $225 in overtime wages.  That nanny gets Tuesday, July 4th off as a paid holiday.  If those 10 hours are counted towards the overtime threshold, her weekly pay doesn’t change.  She’ll still earn $825.  If those holiday hours aren’t counted towards the threshold, she’ll only earn $750.  ($15 an hour for the 10 holiday hours and $15 an hour for the 40 hours actually worked.)  A loss of $75.  This comes down to basic fairness.  Let’s say it all together now – a nanny should never lose money by taking  paid time off.

For families that are fighting against industry standards and want to save money on holiday pay, let’s expand on the last example above.  Let’s say the employer provided 6 paid federal holidays a year and paid the holidays based on an 8 hour day and didn’t count those hours towards the overtime threshold.  That would save the employer $630 a year.  And it would cost the nanny $630 a year.  And each time that nanny received a check with that loss, she’d take it as a reminder that she’s being unfairly docked for taking a paid holiday, she’d feel her work and dedication isn’t valued, and her overall satisfaction with the job would take a hit.

On the other hand, let’s say the employer paid those 6 holidays according to industry standards.  The nanny might not even realize it could have been done differently.  She’d simply be grateful that she can enjoy holidays with family and friends without having to worry about making up any lost income.  She’d feel valued and appreciated and her overall job satisfaction would grow.  And if she’s one of the ten thousand plus nannies who are part of a facebook nanny group, she’d read about the employers who cut costs at their nanny’s expense and chime in, “This makes me love my family even more!”