4nannytaxes.com – Updates From The Nanny Tax Experts

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By Kathy Webb of www.homeworksolutions.com / www.4nannytaxes.com

Read original post here.

The beautiful baby has arrived and mom is preparing to return to work. The new parents begin interviewing nannies, a stressful endeavor for all concerned! Will she keep my baby safe? Will she love my child? Can I depend on her to be on time and not call out at the last minute? Does she have the experience I am looking for? Can I afford her? The absolutely last thing on the new parent’s mind in these interviews is tax and labor law, and this is where nanny and family can find themselves out of sync.

What does the hiring familiy need to know? A short list of important items includes:

  • Nannies are covered by the Fair Labor Standards Act and they are entitled to be paid for every hour worked.
  • Live out nannies are entitled to overtime for hours worked over 40 in a work week.
  • Employers are required to keep time and attendence data on a contemporaneous basis at the worksite (home) and a best practice is to have the employee sign the time card. (Sample Time Sheets)
  • Many states require a payroll notice be given to the employee that details the number of hours at regular hourly rate, the number of hours of overtime when applicable, and the associated hourly rates and tax deductions.

When it comes down to the compensation discussion, it is very common for the household employee to state their expectation in average hourly wage terms (I want to average $15 an hour.) or weekly wage terms (I need to be paid $750 per week.). Parents, it is vital at this point that you stop and do some basic math!

Your job is for 5 10-hour days per week. Let’s translate that into regular and overtime hours and do the math.

40 hours at regular rate x plus 10 hours at the overtime rate y equals $750, right?

The regular rate being offered is $13.64 and the overtime rate is $20.45 in this example. (Don’t worry about the equation, we have a free Hourly Rate Calculator tool that will do this translation for you!) Be very careful to memorialize these figures in your work agreement or offer letter that your employee signs. Be equally careful to compensate any hours over the 50 scheduled at the overtime rate, NOT the average hourly rate you started from!

Sample contract language could be as follows:

“Employee Weekly compensation is of $750.00 gross, based on a gross hourly wage of $13.64 and a 50 hour work week. Employee guaranteed minimum Weekly compensation of $750.00 gross. Weekly hours worked in excess of 40 per week to be compensated at $20.45 gross per hour.”

Questions? Our “Nanny Payroll Specialists” welcome your phone calls and are happy to answer your questions. Feel free to call 800.626.4829 or download the free Nanny Payroll Quick Start Guide below. You will be happy you took the time to get this right from the beginning!

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