What We Learned from the INA Salary and Benefits Survey

Mar 30, 2023 | Hiring an Employee, Household Payroll & Taxes, Newsworthy

The International Nanny Association just released its latest Salary and Benefits Survey and the trends show that more and more nannies are being paid legally and gaining the standard benefits found in traditional workplaces. This means families may find it increasingly difficult to hire a nanny “off the books.” Here are our seven observations from the survey.

The International Nanny Association (INA) just released its latest Salary and Benefits Survey and the trends show that more and more nannies are being paid legally and gaining the standard benefits found in traditional workplaces.

This means families may find it increasingly difficult to hire a nanny “off the books” and will need to offer benefits like health care and increased paid time off to retain their employees.

Here are seven observations from the INA Salary and Benefits survey.

1. More nannies being paid hourly

Since nannies are considered employees under the Fair Labor Standards Act (FLSA), they are required to be paid hourly and not by salary. Nannies – and other household employees – should be paid for every hour worked.

In 2022, 83% of nannies were paid hourly, which is a 14-point percentage increase from 2017’s results and shows more nannies are being properly by their employers.

2. More nannies being paid for overtime

Also, in accordance with the FLSA, nannies – and other household employees – are required to be paid time and a half for overtime. Typically, overtime is considered any hours worked over 40 hours in a workweek.

In 2022, 72% of nannies were compensated for overtime. Five years ago it was just 58 percent. Again, this shows that more families are paying their nannies the right way.

It’s important to note that:

California requires overtime pay after 8 hours in a day; 40 hours in a week; and the first 8 hours on the 7th consecutive day of work in a workweek.
Under federal law, live-in nannies are exempt from overtime requirements. However, several states have overtime pay requirements for live-in employees.

3. Some nannies are still being misclassified

While 83% of nannies are correctly treated as employees, about 9% are being misclassified as independent contractors.

The IRS has clearly stated that household workers are employees – meaning both the family (employer) and nanny (employee) – contribute to Social Security and Medicare (FICA) taxes. The nanny will also owe income taxes while the family will pay unemployment insurance and, in some states, workers’ compensation insurance.

Nannies should receive a Form W-2 at tax time.

Independent contractors, on the other hand, pay both the employer and employee portions of FICA and aren’t protected by workers’ compensation or unemployment insurance.

Classification as an employee or independent contractor comes down to control.

A family sets a nanny’s schedule, details the nanny’s job duties, and provides the tools and equipment to do the job making the nanny an employee of the family.

An independent contractor, however, sets their own hours, performs the job as they see fit as long as the desired result is obtained, and uses their own tools and equipment.

Misclassification is considered tax evasion and can lead to significant fines, penalties, and payment of back taxes for the household employer.

4. Nannies are being paid more

This should come as no surprise to any family that has hired a nanny in the last couple of years. The average nanny pay rate is now $27/hour, a whopping 42 percent increase over the past five years. Several factors – including families desiring in-home care and daycare centers closing or limiting enrollment – have made nannies a more desirable option for childcare.

Outside of market influences, years of experience and having an advanced degree contribute more positively to higher pay for a nanny than other factors like professional activities and certifications.

Forty-three percent of nannies received at least a five percent pay increase for 2022.

Nannies are seeking, and getting more money and benefits so families may need to reconsider their hourly rates and benefits package to attract their top candidates and retain their best employees.

In fact, 70% of nannies say they are either making “more” or “much more” money than they did in 2021.

California at $34/hour and New York at $32/hour have the highest pay rates for nannies. Washington state is next at $31/hour. Connecticut; Massachusetts; Oregon; and Washington, D.C. all came in at $29/hour.

5. Nannies are enjoying increased benefits

Speaking of those benefits…

Nannies receiving health insurance jumped to 28 percent in 2022 from just 17 percent five years ago
Nearly 3 in 4 nannies receive a year-end bonus (average bonus was $1,951)
80% of nannies receive PTO, a significant boost from just 51% in 2017
Two-thirds of nannies receive a yearly pay increase, up from 52% in 2017

Of the nannies that receive PTO, 40% get three to four weeks off. This includes sick days, holidays, vacation, and other paid days off.

6. More nannies are finding jobs through agencies

For the first time in INA’s survey, more nannies are using placement agencies (46%) for finding positions rather than online job sites (42%). GTM Payroll’s own surveys have found that nannies like finding work through agencies because of their security and safety measures, choice of jobs, type of family hiring, and the higher paying jobs with more benefits that are offered.

7. More nannies are being paid through a payroll service

An increase in legal pay is likely resulting in more families paying their nannies through a payroll service like GTM Payroll Services. In 2022, 72% of nannies were paid through a payroll service, up from just 50% in 2017.

A payroll service can save a family the time and resources to calculate paychecks, make withholdings, and remit taxes to the IRS and state agencies. Labor laws are becoming more complex as domestic worker protections become more widespread and more states enact paid sick leave laws. Payroll services can help families pay their nannies the right way and make those additional withholdings for paid leave.

Nannies also enjoy the benefits of a payroll service. It can help ensure they get paid accurately, on time, and, with direct deposit, they don’t need to worry about getting a physical paycheck from their families. With all the proper taxes being withheld, there should be very few surprises for a nanny come tax time.

INA survey methodology

Survey Design Analytics and the INA jointly worked on survey changes from the 2017 INA survey. In particular questions for Newborn Care Specialists were broken out separately. The survey was refined through extensive reviews, tests, and a pilot run. The survey was distributed directly by the INA using an SDA-generated generic link. A total of 978 complete and 223 partial responses were received during the period from 1/19/2023 through 2/19/2023.

To view the full results, go to: https://nanny.org/2022-ina-salary-and-benefits-survey-results/.

Disclosure

GTM Payroll Services was a sponsor of the 2022 INA Salary and Benefits Survey Results and is a member of the INA.

GTM can help

The trends are pointing to increased legal pay in the household employment industry and GTM Payroll Services can help families manage their responsibilities without the risks, hassles, and worries of doing it all themselves. To learn more, call us at (800) 929-9213 for a complimentary, no-obligation consultation with a household employment expert. We’ll discuss your obligations, and what our service can do for you and your nanny, and answer any questions you may have. You can also schedule time with us at your convenience.