Budgeting for Around-the-Clock Care and Sleep Time

In the nanny and senior care world, it’s common for families to need their caregiver to work long shifts from time to time. Whether it’s watching the kids for a whole weekend while Mom and Dad are out of town or taking an around-the-clock shift as part of an eldercare team, payroll can get tricky when overnight shifts are involved.

The Situation

 

A family wanted to take a weekend vacation and offered their nanny an extra $300 to watch the kids while they were gone. They normally paid her $10 per hour and felt this was more than fair compensation for her work over the weekend. However, while cancelling plans with a friend, the nanny’s friend told her she should receive overtime for working these additional hours. By her friend’s calculation, the nanny would be working her normal 30 hours during the week and then an additional 48 hours over the weekend for a total of 78 hours. If she was paid 40 hours at her regular $10 per hour and 38 overtime hours at $15 per hour, she should be paid $970 for the week instead of $600. The nanny brought this up with the family who didn’t know what to do.

The Law

The Fair Labor Standards Act (FLSA) states that overtime must be paid for any hour over 40 that a non-exempt employee works in a 7-day work period. The rate at which overtime must be paid is 1.5 times the employee’s regular rate of pay. The Fair Labor Standards Act classifies household employees such as nannies and senior caregivers as non-exempt workers.

If an employee is required to be on duty for 24 hours or more, the FLSA permits a sleeping period of up to 8 hours to be excluded from hours worked. This exclusion applies if the employee is provided adequate sleeping facilities and is able to sleep for at least 5 consecutive hours uninterrupted by work-related duties.

NOTE: In California, the state Supreme Court recently ruled that the federal sleep time exemption is not permissible unless it is specifically stated in a Wage Order. Since sleep time is not addressed in Wage Order 15 (the Wage Order for household employees), California families cannot exclude sleep time for 24-hour shifts.

The Outcome

The family contacted HomePay to determine what their legal requirements were. A consultant explained they were not required to pay their nanny for up to 8 hours of sleep during her 2 overnight stays since she would have her own room and the kids generally slept through the night just fine. This meant they needed to pay their nanny for 40 regular hours and 22 overtime hours (excluding 16 hours for sleep time), for a total of $730 for the week. Even though it was still more than the $600 the family budgeted for, they understood the reasoning behind the law and were ultimately grateful they were able to resolve the situation before they left for the weekend.

What could have been an ugly overtime situation was prevented by the family contacting HomePay before they paid their nanny. As trusted partners, we encourage you to contact us at any time if you or a client has a question about payroll, taxes or labor law. We’re here to help. And it’s always easier to prevent mistakes than fix them.
Quick Tax Facts
$1,900: Annual wage threshold for Social Security & Medicare (FICA) reporting in 2014
$1,000: Quarterly wage threshold for Unemployment reporting (some state thresholds are lower)
$2,500: Total childcare tax breaks available for families
1.5: Overtime rate of pay when work exceeds 40 hours
$0.56: Federal mileage reimbursement rate in 2014
$7.25: Federal minimum wage (some state rates are higher)
$2: Approximate daily cost to have HomePay by Breedlove handle all payroll and tax compliance duties with no work and no worry.

Contact Home Pay: 
Please reach out to them should you have any questions or concerns.
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