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Nanny Industry Standards: Get it right to attract quality nannies in a competitive market

Many employers are unclear on what is standard in the nanny industry regarding pay and other common benefits. It’s crucial for nanny employers to be familiar with nanny industry standards in order to remain competitive in the employment market while successfully attracting and retaining quality candidates. Here’s what you need to know:

Salary/Hourly Rate. Per the FLSA, nannies are non-exempt hourly employees. Legally, nannies can’t be paid a salary. They must be paid for all hours worked within a pay period which is defined at 7 days.

Overtime. As hourly employees, nannies are entitled to overtime (a rate of time and half) for any hours worked over 40 within a 7 day pay period. It’s illegal to bank hours. Banking hours is when an employer asks their nanny to make up unused hours in a given week at a later time. For example, a parent takes a Friday afternoon off and dismisses the nanny early. They can’t ask the nanny to make up those hours at a later time. If the nanny was paid for those hours one week, they can’t be worked at another time. 

Guaranteed Hours. Full time nannies are compensated for 52 weeks per year. It is a nanny industry standard for full time nannies to receive guaranteed hours. Guaranteed hours is when a nanny is paid in full for their weekly hours whether the employer chooses to use their services or not. If a nanny is hired to work 40 hours per week and the family goes out of town for 2-3 days thus choosing not to have the nanny work, the nanny would still be paid for the full 40 hours. Why? Because the nanny is guaranteeing their availability and their employer is guaranteeing pay for that availability. Just like a daycare or school, you are paying to keep your slot.

Part time nannies are not typically offered guaranteed hours as the weekly hours needed may vary. However, if an employer expects the nanny to guarantee their availability for certain days and times, it would be equitable to guarantee pay in exchange for that availability. 

Mileage Reimbursement. If a nanny is using their personal vehicle to transport children or for any other job related errands, they should receive mileage reimbursement (56 cents per mile as of January 1, 2021). Gas stipends are not acceptable as they don’t account for the wear and tear on the vehicle. 

W-2, not a 1099. Nannies are not independent contractors. They cannot be issued a 1099. Issuing a nanny a 1099 means they pay both the employee taxes and the employer taxes which is not only unfair but it’s illegal. Employee misclassification can open employers up to back pay, tax liabilities and penalties. Be sure to handle this correctly and issue your nanny a W-2.

Holidays. Although it is not a legal requirement, most nannies receive at least these six paid federal holidays; New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. 

Vacation Pay. It is standard for nannies to receive 2 weeks of paid vacation per year. The total paid vacation days are based on how many days a nanny works in each week. If a nanny works 5 days per week, their 2 weeks of vacation pay would consist of 10 days. 

In a situation where both parents are working outside the home, it’s not uncommon for 1 week of vacation to be taken at the employer’s discretion and 1 week to be taken at the nanny’s request. This allows one week of vacation to coincide with time the family is planning to take themselves thus reducing the total amount of backup care needed throughout the year.

Sick Days. Nannies typically receive 2-5 sick days per year. It is to be noted that while it’s not a legal requirement in the US, some states and localities have mandatory paid sick leave laws that must be followed. In some states, it is the law that nannies accrue 1 hour of paid sick time for every 40 hours worked. Do your research to know what is legally required in your area.

Backup Childcare. It is the employer’s responsibility to have alternative care options when their nanny is sick or takes vacation time. Employer’s should choose an option in advance that works best for their family’s needs. Perhaps it’s a possibility for friends and family to be available to step in on occasion. It’s a good idea to have a network of babysitters and/or nannies that are available as well. If you live in a large city, it’s possible there are agencies that can send a temporary nanny to fill in. If none of these options are available, preselect a couple drop in daycares so when the time comes you are prepared.

Annual Raises. It is customary to give your nanny an annual raise. Most families that employ a full time nanny provide a 5% raise after a year of employment. Some families offer as much as a 10% raise. At the very minimum a raise of $1 per hour is typically provided. 

Bonuses. Nannies are accustomed to receiving a holiday bonus. Holiday bonuses are typically equivalent to 1 week of salary. Many families provide the holiday bonus in the first pay period in the month of December. In addition to the holiday bonus, most families give a holiday gift as well. 

Pay Increases for Additional Children. When a family has another child, a raise of $1-$3 an hour is provided to the nanny. It should go into effect when the nanny takes over primary responsibility of the second child. For some families, this is after the parent’s return to work from maternity or paternity leave. It is common for nannies to base their hourly rates on the number of children in their care. If the hourly rate for one child is $15 an hour, it’s within reason that the nanny requests $17 an hour for two children.

Pay Increases for Added Responsibilities. As your children grow, a nanny’s role will change. There may be added responsibilities as your family’s needs change. It’s essential to renegotiate contracts, and increase a nanny’s pay when there are added tasks. This is what is considered standard. If a family adds responsibilities without an increase in pay, the nanny will most likely look for other opportunities as that’s not what they agreed to upon hire. 

Severance Pay. If a nanny is fired for cause, it’s not uncommon for a family to provide a severance equivalent to 1 week of pay, it’s to be noted that no severance is required or expected. However, if a nanny is let go for circumstances that are out of their control (the family’s needs change, a child starts school or a long distance move) it’s standard for the nanny to receive 2 weeks of pay. It would be considered very generous to provide 4 weeks of pay.

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