What's The Standard: Payroll
- Nanny Rachel
- Mar 2, 2020
- 3 min read
Today on WTS we are going to cover the payroll section of the contract. What industry standards and IRS statutes are for paying your Domestic Employee (because these rules apply to more than just nannies).
The first section to cover is Hourly Wages and Overtime Rates. According to the IRS and the Fair Labor Standards Act, nannies are considered domestic employees and must be paid for every hour worked. Nannies are non-exempt employees, which means they must also be paid Overtime rates for all hours over 40. This means, that nannies can not technically be paid salary(this is where the Industry Standard for Guaranteed Hours comes in). This also means, that you cannot have your nanny work 55 hours this week and 25 hours this week, and then average it to 40. That is called Banking Hours and it is illegal according to the Fair Labor Standards Act. In this scenario, your nanny would be paid 40 hours at their normal rate and 15 hours at TIME+1/2 for the first week and the second week, they would be paid according to their guaranteed hours as stated in your contract.
Payroll Scheduling is something that is discussed a lot in nanny groups. Why? Because a lot of nannies get paid at 11:30pm on Friday night. That’s not ok, but unless it’s covered in detail in your contract there isn’t anything “wrong” happening. Your contract should state “Nanny will be paid (weekly/bi-weekly) by (check, direct deposit, Zelle, cash) on (Day of the week) by (time of day)” I encourage everyone to include a late fee in their contract. Most nannies and domestic employees live paycheck to paycheck, if you pay your nanny at 11:30pm on a Friday night, that could leave them without funds until Tuesday depending on how they are paid and their bank. I can hear you saying “their finances aren’t my responsibility?” You are right, but a nanny that has their needs met and feels valued is a more dependable and productive employee.
I strongly encourage families to use a Payroll Company to handle their payroll. While it isn’t necessarily difficult to do on your own, it can be time consuming. Using a payroll company also has the added benefit of making all the legal stuff someone else’s responsibility. You sign the paperwork and send the money, they make sure things are filed in the proper place at the proper time. They also send you all of the documents that you need to share with your employee, paid leave information, worker’s rights information, health insurance information, etc., that sourcing and compiling within specific time periods can be a pain. I will include links to payroll companies I prefer at the end.
Now, let’s talk about SCHEDULE and how that works with payroll and GUARANTEED HOURS.
When you fill out your contract you need to include a schedule that your nanny is expected to work about 99% of the time. We all understand that there may be days you run late or need to have a different schedule, but those days should be few and should always be prearranged with your nanny.
The schedule should look like this:
Monday X:XX – X:XX X total hours
Tuesday X:XX -X:XX X total hours
This should be done for each day that your nanny is expected to be available. This schedule determines your nanny’s GUARANTEED HOURS. It also determines the hours per day for PTO, sick pay, holidays and inclement weather days. Guaranteed hours, means that your nanny guarantees their availability based on the above schedule and you guarantee you will pay them based on their availability.
So, if your nanny is scheduled 9 hours per day, any PTO would be paid at 9 hours per day. It would mean their guaranteed hours are 45 hours per week, 40 at regular rate and 5 at Overtime Rate. INDUSTRY STANDARD is that all hours are paid as if worked, so even during PTO or time you choose not to make use of their scheduled hours, they would still receive 40 hours of regular pay and 5 hours of Overtime pay every week. Guaranteed Hours is the nanny industry way of implementing a “Salary” that is legal according to IRS standards because it is a set number of hours and includes overtime. Any hours beyond their normal schedule, would be in addition to the Guaranteed Hours. I will cover Guaranteed Hours more in depth in another post, but I hope this helps explain how important it is overall and how it works.
I hope this answers questions and gives families a better perspective on what to expect when hiring a nanny! It’s complicated and so much work, but once you get al the details settled, having a nanny will be such an awesome experience for your family!
Thanks for reading!
Rachel Gorham
Payroll Options:
Useful Links:
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