Monday, January 28, 2008
Mandatory Work Agreements for Nannies?
The Montgomery County (MD) Council is considering a proposal to make employment agreements mandatory for in home workers employed by the same family for 20 hours or more per week, according to a January 26 report in the Washington Post.
The work agreements would memorialize the terms and conditions of employment, as well as be required to state the state and county protections the domestic workers are entitled to (including minimum wage, overtime for hours over 40 in a week, a private room with a lock for live in workers, unemployment and worker's compensation insurance).
Violations would be subject to a $1000 per violation fine. The covered workers include nannies, housekeepers, cooks, and elder care workers.
The bill requires the approval of the County Council and the County Executive to become law.
Interestingly, according to IRS statistics, nanny tax compliance in Montgomery County MD is the highest in the nation at 1238% the national average filing rate (Tax Year 2003). Montgomery County includes the Washington DC suburbs of Potomac, Bethesda, Chevy Chase and Silver Spring. The estimated median home/condo value in Chevy Chase in 2005 was $1,054,100.
The work agreements would memorialize the terms and conditions of employment, as well as be required to state the state and county protections the domestic workers are entitled to (including minimum wage, overtime for hours over 40 in a week, a private room with a lock for live in workers, unemployment and worker's compensation insurance).
Violations would be subject to a $1000 per violation fine. The covered workers include nannies, housekeepers, cooks, and elder care workers.
The bill requires the approval of the County Council and the County Executive to become law.
Interestingly, according to IRS statistics, nanny tax compliance in Montgomery County MD is the highest in the nation at 1238% the national average filing rate (Tax Year 2003). Montgomery County includes the Washington DC suburbs of Potomac, Bethesda, Chevy Chase and Silver Spring. The estimated median home/condo value in Chevy Chase in 2005 was $1,054,100.
Labels: nanny contracts, nanny employment contracts, nanny work agreements
Friday, January 25, 2008
Interesting Survey: UK Nanny Rates
The UK's largest 'nanny tax' company, NannyTax and Nursery World, the largest UK publication for early childhood educators, teamed to survey the latest payroll trends for nannies in London and it's suburbs and home counties. The results, published by Adfero, were eye opening to say the least.
We see information here in the US about the escalating costs of nanny care, particularly in our more expensive cities. US families are getting bargains compared to our English cousins!
In London, a live out nanny can earn £33,179 (approximately $66K) per year, and a live in nanny £24,545 (approximately $48K). Compare that to Washington DC where a live out nanny will earn $35 - 40K per year, and a live in nanny $28 - 30K. Note that live out nannies are also referred to as come-and-go nannies and daily nannies, depending on local usages.
In the London suburbs, a live out nanny will earn £25,500 (approximately $50K) and live in nannies £19,988 (approximately $39K).
As a point of comparison, according to the William M Mercer 2006 Cost of Living Survey (most recent available) the cost of living in London is 1.44 times greater than that of Washington DC.
HomeWork Solutions Inc., the United States' leading nanny payroll company, is currently conducting nanny salary surveys in three large metropolitan areas - Washington DC, Greater New York City, and the Los Angeles Metropolitan Area. We plan to publish survey results in early March 2008.
We see information here in the US about the escalating costs of nanny care, particularly in our more expensive cities. US families are getting bargains compared to our English cousins!
In London, a live out nanny can earn £33,179 (approximately $66K) per year, and a live in nanny £24,545 (approximately $48K). Compare that to Washington DC where a live out nanny will earn $35 - 40K per year, and a live in nanny $28 - 30K. Note that live out nannies are also referred to as come-and-go nannies and daily nannies, depending on local usages.
In the London suburbs, a live out nanny will earn £25,500 (approximately $50K) and live in nannies £19,988 (approximately $39K).
As a point of comparison, according to the William M Mercer 2006 Cost of Living Survey (most recent available) the cost of living in London is 1.44 times greater than that of Washington DC.
HomeWork Solutions Inc., the United States' leading nanny payroll company, is currently conducting nanny salary surveys in three large metropolitan areas - Washington DC, Greater New York City, and the Los Angeles Metropolitan Area. We plan to publish survey results in early March 2008.
Monday, January 21, 2008
Withholding Nanny's Last Paycheck
A client family let their nanny go last fall and did not issue her a paycheck for her last week of work. They called our office for advice on how to handle a questionnaire sent to them by their state's Department of Labor in response to a grievance filed by the nanny.
Client's Story:
Client told me that the nanny was consistently late for work, and that the situation did not improve after they talked to her about it. They found another nanny, and let the first one go on a Friday. They did not pay her for the last week because they wanted the nanny to first return the house and car keys they issued her when she started work. Client claimed they had significant expenses getting the house re-keyed as they were worried the nanny would retaliate.
Nanny's Claim:
She worked the entire week and was let go when the parent's returned from work on Friday with no notice or severance. She called the family and they refused to pay her. She emailed them and they replied they would not pay her until all keys are returned. She filed for unemployment insurance, and the state representative advised her to also file a Wage and Hour complaint. She filed a claim through her state agency for the unpaid wages, with the email as part of the documentation.
Our Advice:
Client, pay the nanny. Absent a written agreement documenting what 'company assets' were provided to her upon employment and their value if not returned at the end of employment (with her signature), the house and car keys cannot legally be used as a reason to withhold her pay. Client was not happy, clearly, but at the end of the day agreed to make the payment to avoid legal entanglements.
The client is also fighting the nanny's unemployment claim. They will loose. Why? There is no documentation of the lateness, or the family's counseling that this is a problem. A classic He Said - She Said situation. The benefit of the doubt will go to the employee 99% of the time.
When you involuntarily separate an employee (fire them) it is a best practice to have the final paycheck calculated and ready for the employee. You could even request that the employee sign a form acknowledging receipt of the last payment. (You cannot force her to sign it, but the employee generally will.) Most states required that the final check be prepared and mailed to the employee no later than 72 hours after the involuntary separation. In my experience, dealing with this immediately allows you to put the entire matter to bed permanently - an emotionally attractive solution all around. Hiring and firing a nanny is both a business and emotional decision. Don't let the emotion part of the arrangement blind you to the possible consequences if you run afoul of employment law.
Client's Story:
Client told me that the nanny was consistently late for work, and that the situation did not improve after they talked to her about it. They found another nanny, and let the first one go on a Friday. They did not pay her for the last week because they wanted the nanny to first return the house and car keys they issued her when she started work. Client claimed they had significant expenses getting the house re-keyed as they were worried the nanny would retaliate.
Nanny's Claim:
She worked the entire week and was let go when the parent's returned from work on Friday with no notice or severance. She called the family and they refused to pay her. She emailed them and they replied they would not pay her until all keys are returned. She filed for unemployment insurance, and the state representative advised her to also file a Wage and Hour complaint. She filed a claim through her state agency for the unpaid wages, with the email as part of the documentation.
Our Advice:
Client, pay the nanny. Absent a written agreement documenting what 'company assets' were provided to her upon employment and their value if not returned at the end of employment (with her signature), the house and car keys cannot legally be used as a reason to withhold her pay. Client was not happy, clearly, but at the end of the day agreed to make the payment to avoid legal entanglements.
The client is also fighting the nanny's unemployment claim. They will loose. Why? There is no documentation of the lateness, or the family's counseling that this is a problem. A classic He Said - She Said situation. The benefit of the doubt will go to the employee 99% of the time.
When you involuntarily separate an employee (fire them) it is a best practice to have the final paycheck calculated and ready for the employee. You could even request that the employee sign a form acknowledging receipt of the last payment. (You cannot force her to sign it, but the employee generally will.) Most states required that the final check be prepared and mailed to the employee no later than 72 hours after the involuntary separation. In my experience, dealing with this immediately allows you to put the entire matter to bed permanently - an emotionally attractive solution all around. Hiring and firing a nanny is both a business and emotional decision. Don't let the emotion part of the arrangement blind you to the possible consequences if you run afoul of employment law.
Labels: nanny final paycheck, nanny involuntary separation, nanny terminated
Wednesday, January 16, 2008
January Nanny Tax Deadlines Fast Approaching...
Do you have a nanny caring for your child? January is when the rubber hits the road for nanny employers (ditto for housekeepers, maids and other household staff) vis a vis the nanny taxes.
Your nanny or other household staff are due a 2007 Form W-2 Wage and Tax Statement no later than January 31. This is a multi-part form, with several copies for your employee, a copy for the Social Security Administration, and possibly a copy for your state.
Your state unemployment taxes are due by month end in most circumstances (check your forms, some deadlines are different).
Did you deduct state income taxes from your worker's payroll? You not only have to make your end of year payment to the state this month, but most likely also have to provide an annual reconciliation statement with a copy of your W-2 form(s) by the end of the month.
Payment of your federal nanny taxes is reconciled on Form 1040 Schedule H - an attachment to your personal federal income tax return. This effectively adds your nanny taxes to your personal income tax obligation. You need to report and pay these taxes to qualify for your child care credit or to claim funds in your dependent care account.
Thinking of skipping the nanny tax? Think again. You sign your personal income tax return under penalties of perjury. Historically, in times of federal budget deficits and declining revenues (heard the term recession lately?) the IRS steps up collection efforts. A two income family with dependent children without claimed child care expenses may very well be painting a red bulls-eye target on their income tax return!
You can learn more about the risks and penalties of nanny tax non-compliance at the 4nannytaxes.com website.
Your nanny or other household staff are due a 2007 Form W-2 Wage and Tax Statement no later than January 31. This is a multi-part form, with several copies for your employee, a copy for the Social Security Administration, and possibly a copy for your state.
Your state unemployment taxes are due by month end in most circumstances (check your forms, some deadlines are different).
Did you deduct state income taxes from your worker's payroll? You not only have to make your end of year payment to the state this month, but most likely also have to provide an annual reconciliation statement with a copy of your W-2 form(s) by the end of the month.
Payment of your federal nanny taxes is reconciled on Form 1040 Schedule H - an attachment to your personal federal income tax return. This effectively adds your nanny taxes to your personal income tax obligation. You need to report and pay these taxes to qualify for your child care credit or to claim funds in your dependent care account.
Thinking of skipping the nanny tax? Think again. You sign your personal income tax return under penalties of perjury. Historically, in times of federal budget deficits and declining revenues (heard the term recession lately?) the IRS steps up collection efforts. A two income family with dependent children without claimed child care expenses may very well be painting a red bulls-eye target on their income tax return!
You can learn more about the risks and penalties of nanny tax non-compliance at the 4nannytaxes.com website.
Labels: nanny tax avoidance, nanny tax compliance, nanny tax deadlines
Wednesday, January 09, 2008
Four Nanny Tax Myths Debunked
These tax myths keep circulating - perhaps this will help clear up the misconceptions.
Have a question about the nanny taxes? The 4nannytaxes.com FAQ is a good place to start. Feel free to leave a question or comment here too!
- Our nanny only works part time, 10 hours a week. Since she is part time I don't need to worry about the nanny taxes. If you pay the nanny $1600 or more in 2008 ($1500 in 2007) you have to pay the nanny taxes. Full time, part time, seasonal - it makes no difference to the IRS. So unless this nanny works for less than $3 per hour, YES in fact the family does have to worry about the nanny taxes.
- Our 66 year old part time nanny is collecting Social Security so we don't need to pay Social Security taxes on her wages. So wrong. Whether your nanny is 18 or 118, if you pay wages that meet or exceed the 'nanny tax' threshold, you must pay the Social Security and Medicare taxes. See Social Security Administration website.
- Our nanny is a legal immigrant. How do I fill out the forms to qualify her for the 7 year federal tax holiday? Uh, what? There is no such thing as a Federal tax holiday for citizens, permanent residents, legal immigrants, or ILLEGAL immigrants. See Snopes
- My nanny is an illegal immigrant so I cannot pay the nanny taxes. Wrong again. The IRS does not care about the nanny's immigration status. They are an equal opportunity taxing authority! Hiring an illegal immigrant violates immigration law. Failing to pay the nanny taxes is tax fraud. More about paying nanny taxes of illegal workers.
Have a question about the nanny taxes? The 4nannytaxes.com FAQ is a good place to start. Feel free to leave a question or comment here too!
Monday, January 07, 2008
Ten Tips for Choosing a Quality Nanny Agency
Not all nanny referral agencies are created equal. Many reputable agencies have been serving clients for years, are active in professional and trade associations, and truly strive to make the best match for your family. Some are well meaning but simply inexperienced or lacking the resources (generally manpower) to effectively meet your needs. A small number are simply interested in the bottom line - move them in, move them out. The following suggested interview questions should be directed to the agency BEFORE you retain them.
HomeWork Solutions, Inc. (4nannytaxes.com) is the nation's leading nanny payroll and tax preparation service. We support the International Nanny Association and its efforts to bring excellence to the in home childcare industry.
- HOW LONG HAS YOUR AGENCY BEEN IN BUSINESS? While new is not de-facto bad, experience is a reasonable predictor of success.
- HOW MANY NANNIES DO YOU MATCH WITH FAMILIES IN A MONTH (YEAR)? You want an agency that makes enough matches to be economically viable, but not a meat market. Three to six matches per employee per month is a minimum number. Also helpful, how many of the nannies and families are repeat clients.
- WHAT IS YOUR SUCCESS RATE WITH PLACEMENTS? Listen carefully for what you don't hear. No one is perfect, and it is unlikely that "We have never had a failed placement" is true. Why do they think they are successful? Why do they think some placements haven't worked out? Key: Look for an agency that carefully interviews the family and can restate your needs and expectations.
- WHAT ARE YOUR FEES? WHAT IS YOUR REFUND POLICY? Fees vary considerably across the country, and you should clearly understand the retainer and fee payment policies. 10 - 15% of the nanny's annual salary is an average range. New agencies typically have the lowest fees in the market, this is to offset for the perceived inexperience. Refund policies vary all over the place. Many agencies will pro-rate their fee on unsuccessful placements, others will never refund but might agree to replace the candidate at no cost within a limited period of time. Whatever the policy, make sure you understand it and that it is in writing. The better agencies will make every reasonable effort to please the client, providing that the client's expectations are equally reasonable.
- WHAT IS YOUR SCREENING PROCESS? DO YOU PROVIDE ME ANY DOCUMENTATION ON SCREENING? A good agency will verify the employment history of prospective nannies, and generally contact (via telephone) some or all of the personal references provided. Skilled interviewers will try to determine the accuracy of the employment application, as well as the temperament and historical job performance of the candidate. Criminal and driving checks are generally not ordered until after you have extended a contingent offer of employment and it has been accepted by the nanny. Is the agency compliant with the Fair Credit Reporting Act? You should expect that the agency will share with you, in writing, the results of the prescreening, including the interviewer's impressions. You should also personally check the references of any candidate you genuinely feel you will make an offer to ... but don't exercise the people willing to give references if you aren't serious about the candidate.
Inquire about the specifics of the criminal background checks being done. This is VERY important, as the quality of this service varies tremendously among agencies. Be wary of responses such as "We do nationwide criminal background investigations." There is a very good FAQ about Nanny Criminal Background Searches that you should read to learn more about this subject. - DO YOU HAVE TRAINING OR SUPPORT PROGRAMS FOR YOUR NANNIES? Look for the agency that will organize quarterly Red Cross CPR training, arrange an annual picnic for the nannies, or provide the newly placed nanny with a list of names and phone numbers of other nannies in their area. Look for the agency that provides the nanny with written material to help her adjust to her job ... job description, a daily log format, child development milestones, toilet training tips, and things of that nature. Some agencies assemble and print this material themselves, others rely on commercially published materials available in the industry. Not only do these activities help you and your nanny, they also show the commitment of the agency to the nanny, a commitment that will translate into experienced nannies who will return to that agency for their next job.
- HOW DO YOU RECRUIT YOUR NANNIES? Standard responses can be newspaper advertisement, both local and in remote areas, internet recruiting either via their company website or utilizing a variety of national services, job fairs, college career centers, and outreach to daycare centers and pre-schools. The experienced agency will get returning nannies that they placed a few years ago, and word of mouth referrals from those nannies. These more experienced agencies often have more experienced candidates in their pool. Still others, particularly in urban areas, utilize recruiters in more rural areas to recruit and pre-screen live-in nanny candidates.
- WHAT TYPE OF AFTER-PLACEMENT PROGRAMS AND SUPPORT DO YOU HAVE? Successful agencies will go out of their way to insure that you and the nanny have the tools you need to enjoy a long term, successful placement. Most will work with the family to draft a work agreement that stipulates all the terms of employment for the nanny and will require that this agreement be formalized before the nanny actually starts work. The agency should touch base with both you and the nanny at the end of the first week and first month to gauge the satisfaction with the match. Often the agency will elicit feedback from the nanny that she is afraid to tell you directly. This 'go-between' role is critical to the long term success of the placement.
The agency should also be able to provide you with business referrals for services you will need after the nanny is hired. These include nanny payroll and tax services, nanny health insurance, and workers' compensation insurance providers. - WHAT REFERENCES DO YOU HAVE THAT I CAN CHECK? Don't just ask for client references, check them out. Don't be afraid to ask your co-workers, friends and colleagues for referrals - the unsolicited reference is often the most honest one.
- DOES YOUR AGENCY HAVE ANY PROFESSIONAL AFFILIATIONS? The experienced, professional agency knows that maintaining membership in one or more professional associations helps them stay up to date on the latest trends and issues in the nanny industry. Among these are the International Nanny Association, the Alliance of Professional Nanny Agencies, and the National Association for the Education of Young Children (NAEYC). Many agencies are also active members of their local Chambers of Commerce, Rotary International and similar small business associations.
HomeWork Solutions, Inc. (4nannytaxes.com) is the nation's leading nanny payroll and tax preparation service. We support the International Nanny Association and its efforts to bring excellence to the in home childcare industry.
