HomeWork Solutions continues to track California's AB 889, coined the "Domestic Workers' Rights Bill" as it travels through the state legislature.

The Fair Labor Standards Act (FLSA), as amended in 1974, offers minimum wage and overtime protections to most household, or domestic, workers. What this means is that nannies, housekeepers, maids and other household employees are all protected under Federal minimum wage provisions, and that come and go (live out) domestics are entitled to the overtime differential (150% of hourly wage) for hours worked over 40 hours in a 7 day work week. A notable exception to this 1974 amendment was live in "companionship care" - companionship care for elderly and disabled individuals to allow them to continue to reside in their home, rather than moving to a residential care setting. This specific class of domestic workers were exempted from both the minimum wage and overtime protections of the FLSA. It is important to note that state legislation in CA, MD, NJ and NY all extend minimum wage and/or overtime protections to domestic workers in their state.

When hiring their nanny, most employers believe that they have recruited the perfect caregiver for their child. Most often, they want be fair in their dealing with their nanny, including in the arena of compensation. However, year after year a small suite of common nanny payroll and legal mistakes become very expensive lessons for these nanny employers.

Effective July 1, 2011, the IRS standard mileage reimbursement rate will increase to 55.5 cents per mile. The rate for January 1 - June 30 2011 is 51 cents per mile.

1. Failing to correctly classify non-exempt and exempt employees. This is the mistake investigators often target first. Household employees are non-exempt. This means they are required to be paid on an hourly basis, and that all household employees who do not live with their employers must be paid overtime. New York and Maryland extend overtime requirements to live in domestics - be sure you know your local rules and regulations.
2. Failing to calculate overtime pay correctly.
3. Misclassifying employees as independent contractors. According to the US Department of Labor's Wage and Hour Division [WHD], the "misclassification of employees as independent contractors is an alarming trend."
   
   Often, the WHD adds, "workers are deprived of overtime and minimum wages, forced to pay taxes that their employers are legally obligated to pay and left with no recourse if they are injured or discriminated against in the workplace."
   
   When the WHD finds cases of misclassification, it may refer the cases to state agencies and the IRS. Nannies ARE NOT independent contractors and employers who incorrectly treat them as such do so at considerable peril.
4. Failing to pay for work during missed meal and rest periods. Wage-and-hour laws require employers to pay non-exempt employees for all time worked. Most nannies, and many household employees work without meal breaks or rest periods, and employers are required to pay for the time. If the nanny is not free to leave the premise on meal and rest periods, they must be paid. And when the extra time results in an employee putting in more than 40 hours in a workweek, the employer also owes overtime pay.
5. Failing to pay for certain on-call time. If an employer engages an employee to wait to be put to work, the individual must be paid for the on-call time. Nannies who are required to be available during hours a child is in pre-school or in an organized activity such as sports practice session are considered on-call.
   
6. Failing to keep required records. Federal law requires employers to keep accurate and contemporaneous time tracking records. So if there is a dispute with an employee about hours and pay and the employer is unable to show accurately recorded time records, courts will favor the employee's claims and records. This new smartphone app makes it easy for the nanny to track work hours.
7. Substituting comp time for overtime pay. Under federal law, compensatory time off or comp time in place of receiving overtime pay is generally only legal for government employees. Federal law generally requires that employees get paid overtime for all hours worked over 40 in a seven-day workweek established by the employer. (Note: Some states such as California require overtime pay for hours worked over eight in a day.)
8. Taking unauthorized deductions from paychecks. An employer can only legally deduct from an employee's earned pay the amounts required or authorized by law (such as Social Security, income tax deductions, and court-ordered garnisheed amounts) as well as deductions authorized by the employee (such as deductions for insurance premiums and loan payments).
   
   Examples: A household employer cannot deduct amounts from a nanny or household employee's pay to cover damages to household property, including an auto provided for the nanny to transport the children or damage/breakage while cleaning, cooking, etc. And an employer cannot withhold a departing nanny's final paycheck as a way of collecting an amount the individual owes on a loan previously obtained from the employer -- unless the nanny has given authorization in advance.
9. Failing to abide by state laws. States may have their own version of federal wage and hour rules. So employers need to be aware of and comply with the laws in the states where they have employees.

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The Legal Arizona Workers Act of 2007 requires that Arizona employers comply with the Federal Form I-9 regulations, or face state civil sanctions and/or criminal charges. Federal law already imposes the I-9 regulations on ALL US employers - this law adds the ability of the State of Arizona to utilize the application of state sanctions to further encourage compliance.

California Assembly Bill AB889 passed the assembly in June 1 and now moves to the California Senate for consideration. We previously blogged on this bill last month. In addition to the workplace rules described in the previous blog, HomeWork Solutions has recently learned that household employers will now be required to provide itemized pay stubs with each wage payment. The requirements include:

Workers' Compensation Insurance protects the employer from liability for medical expenses and lost wages when an employee is injured "on the job." A recent news story concerning a Chicago nanny who was struck by a vehicle while walking her charge brings to light the awesome risk that nanny employers run when they don't obtain state required workers compensation insurance.

Twenty three states require that household (nanny) employers maintain Workers' Compensation Insurance policies. Commercial insurers are a good place to start, as this is business or commercial insurance. GEICO and USAA do not offer business insurance. Bear in mind that the broker/agent who helps you secure a policy will generally require you to have other insurance such as homeowners, renters or automobile insurance with them to issue the workers' compensation policy. Where the insurance is legally mandated, a state fund exists as the provider of last resort. This is typically the most expensive method of obtaining coverage, as the fund must insure all applicants, regardless of risk.

HomeWork Solutions Inc. is proud to announce that we are the official conference sponsor for Nannypalooza 2011.