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How the New Overtime Rule Affects Your Nanny and Babysitter

November 3, 2016 Nanny Life, News, Payroll & Taxes, Uncategorized 0 Comments

How the new overtime rule affects your nanny and babysitter

 

IMPORTANT UPDATE

The new overtime law has been put on hold due to a nationwide injunction granted by Texas federal judge Amos Mazzant on November 22, 2016. Please check back for updates on the matter.

 

Some Background Information

The Fair Labor Standards Act (FLSA) classifies both nannies and babysitters (domestic employment) as non-exempt employees, meaning they are subject to overtime laws and minimum wage laws. These laws apply regardless of whether the caregiver is paid on a salary or hourly basis or whether they work part-time or full-time.

 

The New Overtime Law

Here’s a helpful video released by the Department of Labor that explains the new overtime rule in simple terms. Basically, the law states that if a non-exempt employee has a salary less than $47,476, they qualify for overtime paid at time-and-a-half whenever working more than 40 hours within seven days. Overtime pay also applies to nannies and babysitters working on an hourly basis. Moreover, caregivers must be paid at least the federal hourly minimum wage or state minimum wage if higher than the federal minimum wage. The new salary threshold will become effective on December 1, 2016.  

 

Live-In vs. Live-Out Nannies

Nannies that do not live with the family they are employed by (live-out nannies) are subject to both overtime laws and minimum wage laws. On the contrary, nannies that live with their employers (live-in nannies) are not subject to overtime laws in most states. Some states, like California, Maine, Maryland, Massachusetts, Minnesota and New York, have more detailed laws regarding overtime pay. However, live-in nannies are subject to minimum wage laws. For a concise breakdown of each state’s minimum wage and overtime laws, click here.

 

Still Confused? Check out these examples…

Here are some great examples explaining nanny overtime and minimum wage courtesy of HomeWork Solutions:

 

Example 1

SITUATION: The Smith family wishes to hire Linda to be a nanny for their family. Linda’s scheduled workweek is Monday thru Friday 7:30 AM – 5: 30 PM. The Smith family agrees to pay Linda, who does not live in their home, $650 per week.

CONTRACT: Compensation: Position will pay $11.82 per hour, with a weekly guaranteed minimum of $650 per week.

ANALYSIS: Linda’s workweek is scheduled to be 50 hours. This is mathematically structured as 40 hours at $11.82 and 10 hours at $17.73 (1.5 * $11.82). Any hours worked in addition to the 50 scheduled would need to be compensated at the overtime rate of $17.73 per hour because Linda does not live with her employer. The weekly guarantee is the equivalent pay for 50 hours.

 

Example 2

SITUATION: The Martin family of Austin TX wishes to hire Mary to be a nanny for their family. Mary will live in the Martin family’s home. Mary is scheduled to work from 7 AM to 6 PM Monday through Friday. The Martin family offers Mary the position at $500 per week.

CONTRACT: Compensation: Position will pay $9.09 per hour, with a weekly guaranteed minimum of $500 per week.

ANALYSIS: Mary’s workweek is 55 hours and she is not entitled to the overtime differential because she is a live-in domestic. Her hourly rate is calculated by dividing the total weekly salary by the scheduled hours worked. Overtime for hours in excess of the 55 per week would be compensated at $9.09 per hour.

 

HomeWork Solutions also offers several pay rate calculators that use your particular situation to make the overtime and minimum wage requirements very easy to understand. Click here to access the calculator.

 

What Should You Do?

Be sure to accurately record the hours that your nanny or babysitter works to help avoid a wage dispute, even if your nanny is on salary. The Department of Labor offers a free timesheet app for iPhone to make tracking hours as easy and convenient as possible. Or you can simply create a timesheet spreadsheet using a template found online. Also, be sure to include all wage and overtime details in the caregiver’s contract so that everything is in writing.

 

Sources

DOL-Timesheet. iTunes. https://itunes.apple.com/us/app/dol-timesheet/id433638193?mt=8 Fair

Labor Standards Act (FLSA) Overtime Rules and Domestic Employment. HomeWork Solutions. http://www.homeworksolutions.com/knowledge-center/fair-labor-standards-act-flsa-overtime-rules-and-domestic-employment/

HomeWork Solutions’ FREE payroll tax calculator tools. HomeWork Solutions. https://calculator.homeworksolutions.com/

State Minimum Wage and Overtime Laws. FindLaw. http://employment.findlaw.com/wages-and-benefits/state-minimum-wage-laws.html

The Overtime Rule. United States Department of Labor. https://www.dol.gov/featured/overtime

 


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