{"id":32085,"date":"2024-06-07T10:24:50","date_gmt":"2024-06-07T14:24:50","guid":{"rendered":"https:\/\/gtm.com\/household\/?p=32085"},"modified":"2024-06-07T11:37:42","modified_gmt":"2024-06-07T15:37:42","slug":"banking-hours-nanny","status":"publish","type":"post","link":"https:\/\/gtm.com\/household\/banking-hours-nanny\/","title":{"rendered":"Why Banking Hours for Your Nanny is a Big Mistake"},"content":{"rendered":"
\"banking-hours\"

Two terms are unique to the household employment industry: guaranteed hours and banking hours. While interrelated, the first is an industry standard, and the latter is illegal. Here’s why.<\/p><\/div>\n

Two terms are unique to the household employment industry: guaranteed hours<\/a> and banking hours. While interrelated, the first is an industry standard, and the latter is illegal.<\/p>\n

To understand banking hours, let\u2019s first explain guaranteed hours<\/a>.<\/p>\n

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

Guaranteed hours are the set number of hours your nanny will be paid each week at their hourly rate. It can be 35, 40, 45, or whatever hours you need for childcare during a week. If your nanny works the agreed-upon hours \u2013 or fewer \u2013 they get paid the same. Any hours worked over their guaranteed hours would be paid on top of their typical pay, considering an overtime rate for any hours worked over 40 in a workweek.<\/p>\n

Guaranteed hours for a nanny may be more convenient for you when paying them each week and preferred by your caregiver. Many nannies \u2013 especially more experienced ones \u2013 may ask for guaranteed hours upfront.<\/p>\n

You can think of guaranteed hours for a nanny as you would if you were sending your child to a daycare facility. If your child does not go to daycare for a day \u2013 or even a week if you are on vacation \u2013 you still pay the same fee. The daycare facility was available to care for your child \u2013 just like a nanny \u2013 you just chose not to use them.<\/p>\n

In exchange for guaranteed hours, a nanny guarantees their availability to your family during those hours.<\/p>\n

Read What are Guaranteed Hours for a Nanny?<\/a> for additional information.<\/p>\n

What is banking hours?<\/h2>\n

Banking hours occurs when a family requires their nanny to make up unworked hours paid under guaranteed hours.<\/p>\n

Let\u2019s use this example.<\/p>\n

Your nanny has guaranteed hours of Monday-Friday, 9 a.m.-5 p.m. at $20\/hour. That means each week your nanny is paid $800\/week as long as they work 40 hours or fewer.<\/p>\n

Let\u2019s say grandma and grandpa want to take their grandkids out for an afternoon. You do not need your nanny during those five hours, but, under guaranteed hours, they would still get paid their 40 hours because they were available to work, and you chose not to use their services.<\/p>\n

With banking hours (again, illegal, which we\u2019ll get to in a moment), you could ask your nanny to \u201cmake up\u201d those five unworked hours the following week or at some other time in the future. The banked hours would be unpaid.<\/p>\n

In this example, your nanny could conceivably work their normal 40-hour workweek, return on Saturday for date night, and work five unpaid hours.<\/p>\n

Why is banking hours illegal?<\/h2>\n

While you won\u2019t find the term \u201cbanking hours\u201d in federal labor laws, the Fair Labor Standards Act<\/a> does state that \u201ccovered employees must be paid for all hours worked in a workweek<\/a>.\u201d<\/p>\n

Also, \u201cthe workweek ordinarily includes all time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed work place<\/a>.\u201d<\/p>\n

Nannies and other household workers are considered \u201ccovered employees<\/a>\u201d under the FLSA.<\/p>\n

Back to our example above. If a family would like their nanny to work extra for a date night or some other reason, those hours must be paid (at an overtime rate if the hours exceed 40 in the workweek) even if the caregiver had \u201cunworked\u201d hours from a previous pay period.<\/p>\n

Can I \u201cbank hours\u201d for later in the pay period?<\/h2>\n

Let\u2019s say your nanny has guaranteed hours, and you let them go early on Tuesday afternoon because you came home from work early. Can you ask your nanny to stay late on a different day that same workweek to \u201cmake up\u201d the hours missed? Legally, that may be ok, but it could depend on your nanny contract<\/a>. If your work agreement states that guaranteed hours are 9 am – 5 pm Monday- Friday, you likely can\u2019t require your nanny to stay late or come in early on a different day. They may do so as a courtesy, but they may not be obligated to agree to your request.<\/p>\n

What if I pay my nanny every two weeks?<\/h2>\n

If you pay your nanny guaranteed hours every two weeks, you wouldn\u2019t be able to move unworked hours from one week to the next. That\u2019s because of the FLSA rule that nannies must be paid for all hours worked in a workweek. The timing of their pay isn\u2019t a factor.<\/p>\n

What happens when my family goes on vacation?<\/h2>\n

If your nanny has guaranteed hours and you go on vacation, your caregiver still gets paid as if they worked a full week. They were willing and able to work, and you chose not to use their services. Some families and nannies will add language to their nanny contract<\/a> to the effect that the caregiver must use five days of their PTO when the family is on vacation. The rest of the nanny\u2019s PTO can be used at their discretion.<\/p>\n

Another option \u2014 if agreed to by both parties \u2014 is to have your nanny perform other duties while your family is away. They could house sit, pet sit, pick up the mail, clean and tidy the house, or run errands. Remember that your nanny is a professional child caregiver and may not agree to do household chores, but it may be worth exploring with your employee.<\/p>\n

You could also take your nanny on vacation with you<\/a>.<\/p>\n

Other considerations when banking hours<\/h2>\n

You shouldn\u2019t bank hours because it\u2019s illegal and will open you up to a wage claim by your employee.<\/p>\n

Banking hours can also damage your relationship with your nanny. If they\u2019re working more hours during a week because of baking hours, it\u2019s likely on the weekend, early in the morning, or at night. That cuts into their downtime and disrupts their schedule, especially if banking hours is extensive or happens frequently. This can cause resentment, frustration, and burnout on your nanny\u2019s part. If you find an exceptional nanny, treat them like a professional to maintain a positive working relationship.<\/p>\n

GTM can help<\/h2>\n

GTM Payroll Services handles guaranteed hours for hundreds of families and can help you comply with federal and state tax, wage, and labor regulations. Call (800) 929-9213<\/a> for a\u00a0free, no-obligation consultation with a household employment expert<\/a>\u00a0to discuss hiring a nanny and paying them the right way. Or\u00a0schedule time with us at your convenience<\/a>.<\/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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