{"id":15581,"date":"2018-06-08T16:00:57","date_gmt":"2018-06-08T20:00:57","guid":{"rendered":"https:\/\/gtm.com\/household\/?p=15581"},"modified":"2022-04-27T11:39:29","modified_gmt":"2022-04-27T15:39:29","slug":"nanny-salary","status":"publish","type":"post","link":"https:\/\/gtm.com\/household\/nanny-salary\/","title":{"rendered":"Paying Your Nanny a Salary or Guaranteed Hours?"},"content":{"rendered":"
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Paying your nanny a salary is against the law as they are a non-exempt employee who needs to be paid at least time and a half for overtime.<\/p><\/div>\n

The short answer is “no.” You can’t pay your nanny a pre-set, flat-salaried amount for all hours worked in a week. You could pay them for guaranteed hours, which is different from a nanny salary.<\/p>\n

Here’s why.<\/p>\n

Exempt v. non-exempt employees<\/h2>\n

There are basically two types of employees \u2013 exempt and non-exempt. Exempt workers do not need to be paid for overtime hours. To be considered \u201cexempt,\u201d an employee must perform executive, administrative or professional duties and be paid a salary (not hourly). A nanny\u2019s duties don\u2019t fall into one of these exemptions. This means they are a non-exempt employee and entitled to overtime pay. It would be illegal to pay a nanny by salary.<\/p>\n

Coverage under FLSA<\/h2>\n

The Fair Labor Standards Act<\/a> (FLSA) establishes minimum wage, overtime pay, and recordkeeping rules. Under the FLSA, non-exempt employees, like nannies, are entitled to at least the federal minimum wage and receive an overtime rate of not less than time-and-a-half for hours worked over 40 in a week.<\/p>\n

What are guaranteed hours?<\/h2>\n

Offering guaranteed hours to your nanny may seem the same as offering a salary but there is a significant difference.<\/p>\n

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, of course, is against the law as a nanny needs to be paid overtime for hours worked over 40 in a week.<\/p>\n

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 $20 an hour with time and a half for overtime.<\/p>\n

Your nanny\u2019s compensation would be $950\/week ($20 x 40 regular hours + $30 x 5 OT hours). The nanny would be paid this weekly rate as long as they didn\u2019t exceed 45 hours. In this example, hours worked over 45 would be paid at time and a half above and beyond the guaranteed compensation.<\/p>\n

Use GTM\u2019s nanny compensation calculator<\/a>, to determine your nanny\u2019s hourly and overtime rates based on a weekly compensation figure.<\/p>\n

Remember to always state compensation based on gross wages, which is your nanny\u2019s total compensation before taxes and other deductions.<\/p>\n

Guaranteed hours may be more convenient for you when paying your nanny each week and preferred by your nanny. In fact, many nannies \u2013 especially more experienced ones \u2013 may ask upfront for guaranteed hours. They have bills to pay like everyone else and having a consistent paycheck each week helps them with budgeting and their personal finances.<\/p>\n

In your nanny\u2019s work agreement or contract<\/a>, you would need to clearly explain your nanny\u2019s compensation in FLSA-compliant terms, stating a gross, guaranteed weekly compensation broken down by hourly wage, hours in a workweek, hourly rate, and overtime rate.<\/p>\n

GTM can help with guaranteed hours<\/h2>\n

GTM Payroll Services handles guaranteed hours for hundreds of families and can help you remain compliant with federal and state tax, wage, and labor regulations. Call (800) 929-9213 for a free, no-obligation consultation with a household employment expert to discuss your situation.<\/p>\n

Download The Complete Guide to Household Payroll<\/h2>\n

Get our complimentary guide and learn everything you need to know about paying your employees legally and filing your taxes the right way.
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