Nannies Should be Paid Hourly. Why?
Nannies Should be Paid Hourly. Why?
Frequently Asked Questions
Nannies are non-exempt employees of the family they work for. What does this mean?
The term non-exempt employee refers to a worker who IS subject to the terms of the Fair Labor Standards Act (FLSA) regarding such issues as overtime compensation and minimum wage coverage, as well as how frequently the worker must be paid. In simple terms, the household employee is required to be paid an hourly wage and is entitled to overtime pay per the provisions of the FLSA. When your household employee receives a "salary" that covers a work week of more than 40 hours, your employment agreement must explicitly state the regular and overtime rates of pay. See our exclusive Hourly Rate Calculator for help.
| It is important to note that the FLSA specifically calls out domestic employment (housekeepers, maids, nannies, etc.) in the statue as non-exempt employees, covered by the rules and protections of the FLSA. This is not a grey area, subject to individual interpretation. |
Exempt employees are paid a salary and exempted from these FLSA rules. Typically, only executive, supervisory, professional or outside sales positions are classified as exempt employment. Exempt employment will also include highly skilled computer-related employees and licensed professionals, such as doctors, lawyers, architects, engineers and certified public accountants. Many nanny employers are professional workers, are exempt from FLSA protections, and unintentionally try to craft compensation for their nanny in the same manner that they are compensated.
Employers often believe, incorrectly, that the act of paying a salary makes the employee exempt from overtime rules. However, just as applying the labels "employee" or "independent contractor" in a work agreement doesn't determine a worker's actual status in the eyes of the IRS or the law, the same is true for exempt and non-exempt employees in the eyes of the Department of Labor. The FLSA legislation was designed to cover, and protect, as many workers as possible and there is no doubt that nannies are covered under the act.
Why does this matter? There have been many high profile wage disputes involving nannies and failure to make overtime payments and/or to maintain accurate time tracking records. Nannies in these disuptes have been awarded large sums of back pay - simply because the employer failed to correctly classify and compensate the nanny in the first place. Google "Daniel Snyder Nanny Overtime" for a real life example.
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FLSA Overtime Rules and the Compensation Agreement
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at 1-800-NaniTax or e-mail and submit a question.
