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Overtime Calculations with Holiday or Vacation Pay

Posted by HomeWork Solutions on Aug 23, 2018 12:51:00 PM
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Holiday Pay Vacation Pay and Overtime

Many nannies and senior caregivers have a routine work week that includes overtime. A nanny may work five 9-hour days per week, which is compensated as 40 hours at her regular hourly pay rate and 5 hours at her overtime rate of no less than 1.5 times the hourly rate.

Things go along swimmingly, right? But then there is a holiday like Labor Day or the caregiver takes a week of vacation and the weekly paycheck is less. Why is that?

Did you know that the obligation to pay the overtime premium is only based on hours worked in the 7-day work week? So the nanny that works 4 days on Labor Day week is not automatically entitled to overtime. The family can pay 8 or 9 hours of holiday pay (per the written agreement) and 36 hours of time worked at the regular pay rate. A $20 an hour nanny working will have $50 less in her gross pay, and a lower take home paycheck that week.

Failure to understand and plan in advance for this can create friction in the caregiver : family relationship. How do you plan in advance?

  1. The caregiver can negotiate “guaranteed pay” into her work agreement at time of hire. The $20 an hour caregiver who works a 45 hour schedule would gross $950 when she works all 5 days. Guaranteed pay would insure that even if she takes a week of earned vacation or there is a paid holiday in the work week, the family has agreed to never compensate her for less than $950 per week. This is the most common ways families and caregivers work through this situation.
  2. The family can memorialize in the work agreement at time of hire how holiday pay will be compensated. If they don’t intend to guarantee pay, this should be pointed out and agreed at time of hire. The family may say a paid holiday is 9 hours of regular pay for example, instead of 8, and that overtime is not paid on a holiday week. Or the family may say a vacation day is 9 hours of regular pay, and again there is no overtime on vacation pay. This is perfectly legal, and if understood at time of hire the friction that the smaller paycheck may create is avoided.

The written work agreement that anticipates and addresses possible friction points at time of hire is the key element to insuring a harmonious employment relationship. HWS publishes a free work agreement template to help define the most common areas of friction in the household employment relationship – download it today!

Related Links:

What is Guaranteed Pay?

Topics: nanny, agency, senior

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