The information contained herein is not, nor is it intended to be, legal advice about nanny employment law or enforceability. This article is intended to educate the childcare community about the resources available to help domestic employers and employees.
Nannies work independently and don’t have a human resource officer to help them understand and navigate their employment. Likewise, parents who hire nannies may not understand employment law either. To help bridge the gap, it’s important that nannies and families review the resources published by federal and state governments. The Fair Labor Standards Act (FLSA), Fact Sheet #79B, Fact Sheet #79D, and IRS Publication 926 are important resources. In addition to reviewing these resources, family employers and nannies must research and understand any updates to existing laws as well as their state and local laws.
In December 2023, the Department of Labor Women’s Bureau release sample domestic worker agreements including those for nannies.
The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay eligibility, and recordkeeping affecting full-time and part-time workers in the private sector. The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. Where state or local laws require a higher minimum wage, which many do, that higher standard applies. Federal wage and hour laws do not allow employers to average the hours their employees work across multiple weeks so employers cannot carry over hours from week to week to avoid paying an employee overtime.
FLSA information is provided by the US Department of Labor and can be found at dol.gov. Fact sheets are published by the Department of Labor to provide useful information which is helpful as sitters, nannies and other domestic positions have specific clauses within the FLSA.
Fact Sheet #79B: Live-in Domestic Service Workers states, live-in domestic service workers who reside in the employer’s home permanently or for an extended period of time and are employed by an individual, family, or household are exempt from overtime pay, although they must be paid at least the federal minimum wage for all hours worked. Employers of live-in domestic service workers may enter into agreements to exclude certain time from compensable hours worked, such as sleep time, mealtime, and other periods of complete freedom from work duties. If the sleep time, meal periods, or other periods of free time are interrupted by a call to duty, the interruption must be counted as hours worked. Employers must maintain an accurate record of hours worked by live-in domestic service workers. The employer may require the live-in domestic service employee to record his or her hours worked and to submit the record to the employer.
Fact Sheet #79D: Hours Worked Applicable to Domestic Service Employment states that a nanny who must watch over her charge even when the charge is sleeping is on duty and must be paid for that time. In such cases, the employee is “engaged to wait” and must be paid. There is specific guidance provided for nannies who work evening and 24-hour shifts. In some circumstances, an employer may exclude up to eight hours an employee spends sleeping at the worksite from the time for which an employee must be paid. The requirements for excluding or not paying for sleep time vary depending on whether an employee is a “live-in” employee, is working a shift of 24 hours or more or is working a shift of less than 24 hours. For all employees, when sleep time is unpaid, any interruptions to sleep time by a call to duty must be paid. If the employee is interrupted such that he or she cannot get reasonable periods of sleep totaling at least five hours, then the entire night must be paid. Fact Sheet #79D also states that occupations such as casual babysitting are not subject to the minimum wage law.
Nannies and families can be confused between nonexempt and exempt workers. A non-exempt worker is paid by the hour, while an exempt employee is salaried. Per the FLSA, nannies are non-exempt employers who must be paid hourly and are eligible for overtime. Salaried employees are only allowed when the employee earns more than $455 per week, the employee is not eligible for overtime and the employee performs exempt duties such as supervising two or more employees, is a manager, and/or has input in the job status of other employees such as hiring and firing. Childcare is not an exempt duty and thus nannies cannot be salaried employees.
Nannies are considered household employees; also called domestic employees. A household employee is someone hired to do work. The employer controls not only what work is done, but how it is done. It doesn’t matter whether the work is full-time or part-time or that the employer hired the worker through an agency or from a list provided by an agency or association.
What about taxes?
IRS Publication 926: Household Employer’s Tax Guide applies to household employees and domestic workers. For 2019, if a family pays cash wages of $2,100 or more in 2019 to any one household employee, they must withhold and pay social security and Medicare taxes. If a family pays total cash wages of $1,000 or more in any calendar quarter of 2019 to any one household employee, they must pay federal unemployment tax. When hired by a family, the nanny should be asked to complete a W-2 and Form I-9, Employment Eligibility Verification. Both the employer and the employee will pay taxes. The payroll deductions for the employee or nanny include social security, Medicare, FUTA, income tax, and state taxes.
When a family is an employer – it is the employer’s responsibility to keep payroll records. Employers can ask an employee to keep records and submit reports on hours worked. Families and nannies are responsible for reporting all wages, paying taxes, and filing an income tax return.
It’s important that nannies and family employers take the time to learn about and understand the laws for domestic workers. Nanny payroll services can provide support and assistance by answering questions, tracking employment hours, providing documentation and of course, payment. Whether you review the laws on your own, hire a payroll service or gain legal advice from an industry professional, it’s important that both family employers and nannies understand employment requirements.
All Nanny Institute childcare programs include nanny job placement courses to help nannies find employment including resume writing, interview preparation and negotiating compensation.