Hourly or Salary? What’s the Best Way to Pay My Nanny?

Feb 26, 2025 | GTM Blog, Hiring an Employee, Household Payroll & Taxes

One of the big decisions when hiring a nanny or other household help is whether to pay hourly or a salary. For most situations, paying your nanny hourly is required. Read on to learn more about the , calculating pay, and what exactly guaranteed hours mean.

Paying hourly simplifies mandatory record-keeping required by the FLSA, which states hourly workers are classified as non-exempt, meaning they are entitled to overtime pay. The rate must be at least one and a half times higher than the employee’s standard rate for hours worked over 40 in a workweek. If a worker is classified as exempt, they are not entitled to overtime. The FLSA explicitly states that household workers are classified as hourly, non-exempt employees.

The FLSA also says you don’t need to pay a special overtime rate for live-in employees who go over 40 hours in a workweek. Some states, however, have implemented overtime rules for live-in employees, which household employers will need to follow.

What is The Typical Payroll Cycle?

An employee’s hourly wage is based on the actual hours they’ve worked in a given payroll cycle. While a salaried employee is paid based on an agreed annual salary amount, divided by the number of payroll cycles in a calendar year. The most common payroll cycles are:

Weekly, giving you 52 cycles for the year;
Weekly-Lag, which lags your payroll by one week, also giving you 52 cycles in the year;
Bi-Weekly, giving you 26 cycles in a year;
Semi-Monthly, giving you 24 cycles; and
Monthly, giving you 12 cycles per year.

For example, an employer and a nanny agree to an hourly wage of $25. To compute the compensation, you would multiply the hours (40) times their rate of $25 to come up with a $1,000 weekly rate. For a salaried employee, you would take the annual salary (for example, $52,000) and divide by 52 pay frequencies to come up with a $1,000 weekly salary.

You can use our nanny tax calculator to calculate gross and net pay.

Some states may require a set pay cycle for household employees. For example, in New York, nannies and other household workers must be paid weekly or weekly lag.

What are Guaranteed Hours?

Offering guaranteed hours to your nanny may seem the same as offering a salary, but there is a significant difference.

A salary is a pre-set, flat amount paid to your employee regardless of hours worked in a week. Your nanny would make the same amount of money whether they worked 30 hours or 50 hours. This is against the law as the FLSA states a nanny needs to be paid overtime for hours worked over 40 in a week.

With guaranteed hours, you would set an hourly rate, an overtime rate, and the typical number of hours you would need your nanny each week. For example, you need a nanny for 45 hours a week and would pay $25 an hour with time and a half for overtime.

Your nanny’s compensation would be $1,187.50/week ($25 x 40 regular hours + $37.50 x 5 OT hours). The nanny would be paid this weekly amount as long as they didn’t exceed 45 hours. In this example, hours worked over 45 would be paid at time and a half above and beyond the guaranteed compensation.

Learn more about offering guaranteed hours to your nanny.

GTM Can Help

In conclusion, by sticking to hourly wages, families ensure compliance with federal law and overtime regulations and maintain accurate records, eliminating potential legal risks. GTM offers specialized expertise in navigating the complexities of nanny payroll. We’ll help ensure your nanny gets paid accurately and on time, while also managing all tax withholdings, allowing you to focus on your family without the burden of payroll administration. Call us at (800) 929-9213 for a complimentary, no-obligation consultation with a household employment expert. Or schedule time with us at your convenience.