Many, many nannies and senior caregivers have a routine work week that exceeds 40 hours a week. Presuming that the employment situation is long term, most families agree to specific paid holidays. Exactly how does a paid holiday impact the weekly overtime calculation?
Mary works 5 days a week for 9 or 10 hours a day. Her typical pay is $20 an hour for the first 40 hours, and $30 an hour for the hours over 40. In her work agreement, the family has offered 8 hours of pay for certain holidays, including July 4 Independence day.
Mary works 10 hours on Monday, Tuesday and Wednesday, has Thursday July 4 off with pay, and 9 hours on Friday.
Federal law states that overtime calculated as one and one-half times the hourly rate of pay is due to workers for hours worked in a seven day work week. Because holiday pay is not part of hours worked, the holiday pay is NOT included in the weekly overtime calculation.
Applying the Law:
In the situation described above Mary worked 39 hours in the week, and received 8 hours of holiday pay. None of her hours in this week trigger overtime pay, so her gross wage is $780 regular hours and $160 holiday pay, for a gross wage of $940 for the week.
It is very common in household employment for a nanny or senior caregiver to negotiate guaranteed pay - meaning the family agrees to pay this minimum amount every week whether the caregiver actually works these hours or not. Guaranteed pay is generally defined as a fixed number of regular and overtime hours, and is intended to provide the nanny or senior caregiver income stability week to week even if the family decides her services are not needed for some portion of the week - common when a family takes vacation or has other family members visiting who assume some caregiving responsibilities. When guaranteed pay has been agreed to, hours above the guarantee are paid at the applicable regular or overtime rate, and hours below the guarantee do no change the payroll. If Mary had a guaranteed 50 hour work week, she would always have a gross pay of $1000 for every week she didn't exceed 50 hours, and would be paid an additional $30 an hour for all time over 50 in the week.
When guaranteed hours are agreed to, the family generally establishes the weekly hours guaranteed as the maximum hours they would need the caregiver in the week, agrees on the guaranteed weekly gross wage that covers those hours, and works backwards to determine the hourly and overtime rate. HomeWork Solutions' Hourly Rate Calculator makes this calculation effortless, and provides appropriate compensation language to use in the work agreement.
Do you have questions or need some help with this? HomeWork Solutions' household payroll experts are available for a free consultation - don't hesitate to reach out.