When hiring a nanny or other household employee, it's common to hear about guaranteed hours—and for good reason. This benefit offers financial consistency for your employee while giving your family scheduling flexibility. However, confusion often arises when families try to translate this into a “salary,” which can unintentionally lead to violations of wage and hour laws under the Fair Labor Standards Act (FLSA).
Let’s clear up the confusion between guaranteed hours and salary, and walk through how to structure your compensation agreement to remain compliant and stress-free.
Guaranteed hours refer to a promise that your employee will be paid for a minimum number of hours each week, even if you don't always need their help for all of those hours.
For example, if your nanny is guaranteed 45 hours a week, and you only need them for 40 in a given week, they’re still paid for 45. It’s a reliable way to ensure your employee’s availability for a specific schedule, while also ensuring income stability for your caregiver, and a common expectation among professional nannies.
Situations where guaranteed hours apply:
If the nanny is ready and willing to work but not needed, they still get paid for their guaranteed hours.
Here’s the key legal point: almost all household workers are classified as non-exempt hourly employees under the Fair Labor Standards Act (FLSA). This means they must be paid overtime (time and a half) for hours worked over 40 per week under federal law—regardless of whether you agreed on a “salary.”
Some states have additional daily overtime laws that must be taken into account as well.
Paying a flat weekly or bi-weekly wage without calculating the correct hourly and overtime rates may lead to wage disputes and legal liability. The same is true for using unclear terms such as "average rate" or "blended rate". In the event of an audit or complaint, that salary, or unclear rate may be evaluated based on only 40 hours, and you may owe significant back pay.
To offer guaranteed hours while complying with FLSA overtime laws, you must base compensation on an hourly rate, even if you guarantee a certain number of hours each week.
Here’s how you could structure this in your work agreement:
Example:
Employee weekly compensation of $1,040 gross for a 48-hour work week. Based on a gross hourly wage of $20 for the first 40 hours and $30 per hour for the remaining 8 hours. Weekly hours worked in excess of 48 per week to be compensated at the overtime differential of $30 gross per hour.
This setup works as long as the employee never works more than 48 hours in a week. It’s clean, transparent, and protects both parties. If they do work more (e.g., 50 hours), simply pay the two additional hours at the overtime rate.
If your employee regularly works more than 40 hours a week, you'll need to calculate the regular and overtime hourly rates properly:
Offering guaranteed hours shows that you respect your employee’s time and financial security. It's one of the top benefits sought by experienced household workers and helps you attract and retain qualified professionals. It’s also a great way to build trust, loyalty, and long-term consistency for your family.
Peace of mind for your caregiver.
Reliability for your family.
Full compliance with wage & hour laws.
HomeWork Solutions has been helping families stay compliant since 1993. Whether you need help calculating overtime or you need additional help understanding all of your household payroll and tax obligations, we’re here to make household payroll simple and stress-free. Schedule a complimentary consultation with us or give us a call at 1-800-626-4829. We look forward to speaking with you.