Hiring a nanny is an important decision and there are likely many questions going through your mind. Setting hours and understanding how much to pay your nanny is an important part of the process, and there are various terms that are used that you may be confused about. Salary* and guaranteed hours are terms that are often used interchangeably, but in fact, they are completely different. If you’ve wondered what guaranteed hours are, we’ll break it down here for you.
Guaranteed hours are specific hours that you guarantee that your nanny will be paid for, so she can rely on a consistent paycheck. For example, if you guarantee that your nanny can work 40 hours a week with your family, but sometimes you don’t need her for all of those hours, you still must pay her for those hours worked, regardless if she works them or not.
The guaranteed hours benefit kicks in when the nanny is willing and able to work, yet the family for any reason decides that her services are not needed. Examples include:
A salary is a set wage that a person gets whether they work more or less than their designated set hours. However, nannies and other household employees cannot be paid a true salary without regard to overtime, because according to the law, they are non-exempt employees and are due overtime pay for hours worked over 40 in a week. Nannies must be paid based on an hourly wage, not a set salary each year. If nannies work more than their designated weekly hours, then they must be paid hourly on top of that with appropriate overtime. A salary does not allow for this. Nannies must always be paid based on an hourly rate and if they aren’t being paid that, then you are not following federal wage laws and you could run into trouble down the road.
Times when the nanny's absence is not by the parent's choice AND she does not have any paid time off available are not covered by guaranteed hours. If you offer 5 sick days and she calls in sick for a 6th day that year, unplanned transportation issues and no PTO remaining, or nanny asks for two additional vacation days to attend an out of town wedding or family event, these are unpaid in a guaranteed hours situation although you may choose to pay at your discretion. Your nanny should not expect compensation in these situations, and your work agreement should clearly spell out.
Offering your nanny or caregiver guaranteed pay is an important benefit to your nanny and most professional nannies demand this. Offering this benefit will help you hire and retain the best caregivers.
Hiring a nanny for your home has a different set of rules when it comes to wages and labor law. It can be confusing at first, so it’s important to do your research and talk to a household payroll specialist if you need additional clarification. Contact us today for more information!
*We use the term "salary" in this post to mean a set wage for an exempt employee, what most people think of when they hear "salary." For more specific information straight from the Department of Labor click here.