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How do I calculate overtime for my salaried nanny? What about compensation for occasional overnights?

Many nannies are paid on a salaried basis. What this typically means is that the family has agreed to pay the nanny a pre-determined salary for a given number of hours in a pay period. The full time nanny work schedule is often more than 40 hours per week. It is important to remember, however, that nannies are NON-EXEMPT employees according to Federal Law and are entitled to overtime compensation for hours worked in excess of 40 per week. Minimum wage and overtime requirements are set, as a floor, by Fair Labor Standards Act (FLSA) and states may have stricter requirements of their own.

Setting an Hourly Pay Rate

Stating the employee wage in an hourly pay rate form assists the employer in remaining compliant with the FLSA and state minimum wage rules and helps avoid wage disputes with the employee. In a dispute, a work agreement that simply stipulates a weekly salary will be evaluated based on a 40 hour work week. Our exclusive Hourly Pay Rate Calculator simplifies the conversion of a salary to an hourly wage.

HomeWork Solutions strongly encourages families to develop a written work agreement that documents all terms and conditions of employment. This should include agreed pay rate, hours of duty, paid holidays, vacation/sick/personal days paid and the benefit accrual method.
 Structuring FLSA Compliant Work Agreements

How, then, to calculate overtime for the salaried nanny? Employers must first translate the nanny's salary to an HOURLY PAY RATE. The means to do this will be different, depending on whether the nanny lives-in with the employer, or lives-out (come and go).

1. Convert the nanny's salary to a weekly one.
   Weekly Salary: No Conversion Needed.
   Bi-Weekly Salary: Divide the salary by 2.
   Semi-Monthly (2x Per Month) Salary: Multiply by 24 (number of payments in a year) and divide by 52 (number of weeks in a year).
   Monthly Salary: Multiply by 12 (number of payments in a year) and divide by 52 (number of weeks in a year).
2. Calculate the number of hours worked in a week.
3. If total weekly hours are less than 40, simply divide the weekly salary by the number of hours worked. Result is HOURLY PAY RATE. If total hours GREATER than 40, continue below.

Now that the HOURLY PAY RATE has been determined, simply multiply the additional hours worked (above the regularly scheduled/compensated hours) by the HOURLY PAY RATE, applying the overtime differential if a live-out employee, to determine the additional overtime compensation due.

 Hourly Pay Rate Calculator Tool - FREE!

Compensation for Occasional Overnights

From time to time a nanny employer may require that the nanny stay overnight when parents are out of town. Employers and nannies alike often question how such overnight stays should be compensated, as the nanny is clearly sleeping for some portion of the time on duty.

Compensation for occasional overnights should be worked out in advance of the occasion, preferably memorialized within the written work agreement. The nanny industry standard practice for overnight care that is contiguous with a scheduled work day is to pay an overnight care differential of 1.5 times the nanny's normal daily rate. This means the nanny paid $500 per week Monday - Friday who provides Thursday overnight care would be compensated an additional $150 that week for the overnight portion of her services.

Non-contiguous overnight care - a Saturday night when the nanny is not scheduled to work either Saturday or Sunday - is typically much more generously compensated. Negotiating this type of compensation in advance is a good practice to avoid misunderstanding and conflict with the nanny.

 More Information: Publication 926

For More Information contact HomeWork Solutions, Inc.
at 1-800-NaniTax or e-mail and submit a question.