Household employees must be paid at a rate that meets or exceeds the Federal Minimum Wage standards — currently $7.25 per hour. Important Note: Many states have higher Minimum Wage standards (for example, Illinois has a minimum rate of $8.25 per hour). For minimum wage laws by state visit Department of Labor.
Household employees are classified as non-exempt workers, and federal overtime law dictates that non-exempt workers must be paid overtime for more than 40 hours in a 7-day work week. Overtime is calculated at a rate of 1.5 times the regular rate of pay. Overtime law applies whether the employee is paid on an hourly or salary basis; it’s the occupation — not the type of pay — that determines overtime requirements. For example, if your nanny earns $13.00 per hour and works 45 hours per week she will earn $13.00 for the first 40 hours and $19.50 the remaining 5 hours.
Live-in employees do not have to be paid time-and-a-half, but they must be paid the regular rate of pay for every hour that they perform duties. That is to say they must be paid for every hour worked. Many families falsely believe they can hire a live-in nanny and have her work all hours as needed for a set weekly salary. This is incorrect, as the live-in nanny must also be paid for every hour worked at an hourly rate the meets the minimum wage in your state.
Remember, it is legal to pay your employee a salary and have the overtime hours included in the compensation. To accomplish this, you must have a written employment agreement that explicitly details the regular rate of pay and the overtime rate of pay. If you’d like help calculating the regular and overtime pay rates or with the employment agreement language, just let us know.
Families are not required to offer their household employees vacation, sick days, and holiday pay. However, these perks are a great way to attract and retain your nanny.
LEGAL WORK STATUS
Your nanny must be documented and authorized to work in the United States. Cambridge Nanny Group verifies that your nanny is legally permitted to work in the United States and will provide you with an I-9 and all the necessary documentation.
A nanny is considered a “Household Employee”. A household employer is defined as anyone who pays an individual to perform duties in or around their home. Household employees include nannies, nurses, tutors, housekeepers, gardeners, cooks, personal assistants, household managers, etc. If you pay that person $1,800 or more in a calendar year, you will be required to fulfill state and federal tax obligations (sometimes referred to as “nanny taxes”). Take a deep breathe. The mere mention of nanny taxes or legal compliance can raise blood pressure. No need to worry. We’ll hold your hand and walk you through what you need to know.
Employers in some states are required to carry a Workers’ Compensation policy on household employees. Workers’ Compensation is not a tax; it’s an insurance policy that helps cover lost wages and medical expenses due to injury or illness resulting from the workplace. The intent of Workers’ Compensation is to help employees make ends meet when they’re laid up due to injury or illness caused by the job site – thereby reducing the number of counter-productive law suits over employee accidents. If Workers’ Compensation is required in your state, we suggest that you first check with your homeowner’s insurance carrier. Often, it is included as part of your umbrella homeowner’s policy. If you’re not already covered, you can usually add a rider to your policy over the phone. Each state has different workers’ compensation regulations. For the requirements in your state, click here.
Employees who are asked to use their own car while on the job should be reimbursed at a rate of 55.5 cents per mile (effective 2010). Commutes to and from work each day are not considered “on the job” and, therefore, employers are not responsible for any reimbursement on those miles. But a nanny who utilizes her vehicle for work should be compensated for wear and tear of her car.