Why I Refuse to Use the Word Salary

As the creator of the A to Z Nanny Contract, the word “salary” is at the top of my “DO NOT USE” list when talking about nanny wages. Here’s why.

Let’s Start with the Definition of Salary
Dictionary.com defines salary as “a fixed compensation periodically paid to a person for regular work or services.”

Wikipedia define it as “a fixed amount of money or compensation paid to an employee by an employer in return for work performed. Salary is commonly paid in fixed intervals, for example, monthly payments of one-twelfth of the annual salary.”

Ask the average Joe or Jane on the street and you’ll get a similar answer. Salary means you get paid a set amount to get the job done regardless of how many hours it takes. We think about our country’s workforce as having two basic camps: those who receive an hourly wage and those who receive a salary. The factory worker gets paid an hourly wage; the supervisor in that factory gets paid a salary. The receptionist at a law firm gets paid an hourly wage; the lawyers at the firm get paid a salary.

Because there’s this common understanding around what salary means, when most nannies and parents hear that a nanny is paid a salary, they interpret that to mean she’s paid a set amount per week for as many hours as she’s needed. Yes, they have a “typical” number of hours in mind but if she ends up working more or less, she’s paid the same.

Besides the boundary issues that often come up with salary, the legal problem is the Fair Labor Standards Act says a nanny must be paid for every hour she works. So if she works 45 hours, she has to be paid for 45 hours. If she works for 50 hours, she has to be paid for 50 hours. And then there’s the overtime issue. Bottomline: to keep things fair and legal, a regular and overtime hourly wage is the way to go.

But I Do a Base Salary Plus Overtime
That’s the statement I hear most often from those that are strongly attached to the idea of salary. My question is why use terminology that muddies the waters rather than clearly states what you’re doing?

People usually go for a base salary plus overtime for two reasons. First, they don’t want to be a time tracker. The idea is substantial overtime, say 5 or 6 hours on a Saturday, will be paid as overtime but those 10 and 20 minute late days will be covered by the salary. Second, they want to ensure the nanny is paid even when the family is away on vacation.

In theory, those reasons makes sense. But in practice, they can come back to bite you.

Being a time tracker is a pain but it’s also part of being an employee and an employer. I recommend keeping an accurate record of a nanny’s hours because legally, nannies must be paid for ALL hours worked. Ignoring 15 minutes here and 30 minutes there puts employers at risk for a wage claim. Also, it’s very easy for this approach to snowball into a real problem in the employment relationship. Being 10 minutes late twice in a busy week could be seen as OK by the parent and seen as disrespectful by the nanny. Clarity around these issue is always a good idea.

And shouldn’t nannies get paid when employers go out of town? Of course they should be! However I recommend accomplishing that through guaranteed hours rather than a base salary. Guaranteed hours means the nanny is paid if she’s available to work but the family doesn’t need her. A base salary means the nanny is paid regardless of circumstances. What if the nanny breaks her foot and needs to be off work for 4 weeks?  What if an out-of-state parent gets ill and the nanny needs to go home for a 2 week visit? What if the nanny wins an amazing once in a lifetime month long trip? (And these are all real life scenarios that I’ve seen happen in the past year.) So if the nanny has to take extended time off, the question becomes can the family afford to pay her a base salary or does she need to take it as unpaid time off? In most cases, the answer is unpaid time off.  It’s important for both sides to know what to expect in these type of situations.

Remember the words you use to detail wages are important and can make a big difference in how unexpected situations are handled in your employment relationship. So choose carefully!

– See more at: http://nannybizreviews.com/2014/07/why-i-refuse-to-use-the-word-salary/#sthash.X0SUi3vY.dpuf