Do I REALLY Have To Pay My Nanny For That?

Hi everyone! I hope that your holidays are off to a great start.

“Do I REALLY have to pay my nanny for that?”

I’m not kidding when I say that I have heard that phrase dozens of times in the last couple of weeks. The nanny market continues to be super competitive across the United States and inflation is pinching us all in the wallet.

This has forced parents to increase the pay rates and compensation packages that they are offering to their nanny in order to be competitive.

For first time parents or those families that haven’t employed a nanny recently, these increases in nanny compensation can come as a HUGE shock.

I surveyed our team recently and below are the top four nanny pay questions that we have heard from parents in the past month:

• Do I really have to pay my nanny overtime pay, that gets really expensive?

• Can I offer only half the guaranteed hours to my nanny while we are away on vacation for the holidays?

• I don’t need my nanny for all of their guaranteed hours this week, can I pay them the same amount this week and next week, but just have them make up those hours that next week?

• Do I have to reimburse for mileage when my nanny is using their car for driving on the job? She’s only taking our kids a few miles away to the park.

In today’s video, I break down several incorrect assumptions about nanny pay.

Check it out and I hope you find it useful!

Click Here To Watch!

A transcript of the video can be found below: 

Hi everyone, Laura from Nanny Parent Connection here. Happy holidays!

I’m back with my next video, “Do I Really Have To Pay My Nanny For That?”.

One crucial piece of hiring a nanny of the caliber you are seeking is to make sure that you are compensating properly.

Here are some common questions and misconceptions that I hear from parents regarding nanny compensation.

Do I really have to pay my nanny overtime pay, that gets really expensive?

Can I offer only half the guaranteed hours to my nanny while we are away on vacation for the holidays?

I don’t need my nanny for all of their guaranteed hours this week, can I pay them the same amount this week and next week, but just have them make up those hours that next week?

Do I have to reimburse for mileage when my nanny is using their car for driving on the job?

Let’s break down each scenario so we can learn if you really have to pay your nanny for that:

Scenario #1: Overtime Pay

Many families are surprised to learn that they must pay their nanny time and a half for any hours worked over 40 in a week. It’s not an option!

A nanny position is no different than working any other position, all of the standard labor laws apply.

It’s true that pay at time and a half really adds up as many families will point out.

Nanny care is expensive, and it’s worth mentioning that working more than 40 hours per week is very taxing on anyone, let alone for a nanny.

We all know it’s really difficult for nannies to get regular rest breaks and meal breaks due to the nature of their jobs, these breaks are typical and scheduled for other positions.

Even if a nanny is able to sit down and rest during a child’s nap time, keep in mind they are both on call and they need to be ready to re-engage at a moment’s notice.

So they are not truly off, and of course, these types of breaks should absolutely be paid.

If a family truly wants to avoid paying a nanny overtime pay, then they should keep their nanny’s hours at only 40 hours per week and not go over.

If they need more than 40 hours of care per week, it might be worth looking at hiring another nanny in order to keep costs down.

Scenario #2: Guaranteed Hours

While offering guaranteed hours is not a legal labor requirement, it is considered to be a nanny and industry standard. Most nannies I know of will not take a position that does not offer guaranteed hours.

Guaranteed hours is when you are guaranteeing the income of a typical work week for your nanny in the event that you don’t need their services, such as when a family is away on vacation. Offering guaranteed hours is an investment in your nanny. It allows them to be able to count on their income each week.

Offering guaranteed hours when you are advertising a nanny position means that you will attract quality nannies to the role with your family.

And it’s worth mentioning that offering guaranteed hours is not the only piece of the puzzle, a well-rounded compensation package is equally important. 

Families often ask about how many hours they should guarantee each week. You should guarantee the typical amount of hours worked in a week to your nanny.

If it’s typical that your nanny works 40 hours in a work week, you should offer them 40 guaranteed hours.

Offering guaranteed hours does not mean that you are offering fewer hours of pay to your nanny in the event that you are away.

How valued do you think your nanny will feel if they have no guaranteed hours or fewer guaranteed hours in the event your family decides to go take a vacation?

They are losing out on pay through no fault of their own so you can go relax at the beach.

Especially in a nanny’s market like we have right now, a nanny who doesn’t feel valued or is losing out on their income through no fault of their own will very likely move on to another family who can and will offer guaranteed hours.

Scenario #3:  Banking Hours

I get this question frequently from parents. 

If I don’t need my nanny for all of their guaranteed hours for one week can I just have them make up those hours but pay them the same for guaranteed hours the next week?

This practice is called banking hours and it is not legal to do so.

Legally, you cannot have your nanny make up hours from one week to the next, you must pay your nanny for all hours worked in a week. 

Now I know this concept might be a little confusing, so I will give an example:

A nanny gets paid for 40 guaranteed hours per week with their family. 

On Week #1, the family only needs their nanny to work for 30 hours yet they are still paid for 40 hours under their guaranteed hours. On Week #2, the family needs 50 hours of work from their nanny, the nanny would get paid for 50 hours of work in Week #2 because you cannot bank hours from one week to the next. 

I will also mention that the nanny would need to be paid time and a half for those 10 additional hours that week.

Weeks #1 and #2 do not balance each other out because banking hours is not legal.

Scenario #4: Mileage Reimbursement 

Mileage reimbursement is a nanny industry-standard compensation package item.

When a nanny must use their own vehicle for driving on the job, they should be reimbursed for each mile driven at the rate the IRS determines for mileage reimbursement each year.

And while this is a nanny industry standard, this is not a legal standard so long as the cost to the nanny of operating their vehicle on the job does not bring their hourly rate below minimum wage.

I’m guessing though that most nannies will not want to bring home less hourly pay simply because they need to use their car on the job for driving. This is why mileage reimbursement is so important.

Offering mileage reimbursement is actually advantageous versus tacking additional pay onto the hourly rate, because mileage reimbursement is not taxable. It’s not taxable so long as you track and record the mileage your nanny drives while working for your family.

Tracking mileage might seem complex. Some nannies and families still prefer to use the good old pencil and paper, other families like to use the Mile iQ app which makes keeping that mileage log seamless and easy for everyone.

There are other ways of course to reimburse for mileage such as providing your nanny a stipend or a gas card. However, this method is more difficult to track per the IRS guidelines in order for this to be non-taxable income.

This can get a little bit tricky because you have to be able to prove that you are not reimbursing more than the IRS-determined rate.

If you are reimbursing over that rate, it switches from a reimbursement to a compensation and that makes that amount taxable.

Alright everyone, I hope you now have a deeper understanding about overtime pay, guaranteed hours, banking hours, and mileage reimbursement when it comes to nanny care.

Understanding how these can affect your relationship with your nanny, or your ability to find or retain a nanny will allow you to be a better employer to meet all of the legal thresholds, and it will also lead to lower turnover in nanny care with your family. 

Alright everyone, that’s it for today. I hope you found this video helpful if you like this video please click the like button, subscribe, or ring the bell so that you can be alerted when more of these videos come out next time.

Thanks everyone, bye!