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What is the "Typical Salary" for a Nanny?
NannyNetwork.com consulted with Kathy Webb, President HomeWork Solutions, Inc., a leading payroll and tax service geared to nanny and other domestic employers. She advises "The first rule is that there is no established standard when it comes to nanny salaries. Wages vary by geography, hours, experience and education of the nanny. Local nanny placement agencies are the best resource for local job conditions. The nanny shortages of the late '90's and the resultant salary inflation have largely abated."
With that said, an entry-level live-in nanny will expect a minimum of $400 gross per week for a HS grad (18-20 yrs.) with no previous nanny experience. Remember minimum wage rules apply. Live-in wages can range to $1000 a week gross and sometimes higher for college graduates and the professional, experienced nanny.
Recognizing the key role geography plays in live-out wages, a nanny will command $9-$12/hr. in less costly areas, upwards to $18-20/hour in major metro markets. Hours over 40 in a week are compensated at the overtime premium for live-out nannies, calculated as 1.5 times the regular hourly rate. Experienced caregivers for infants and for more than two children generally command a premium. A nanny employed on a full time basis expects to be paid her contracted weekly salary for 52 weeks per year, even if the family does not require her services during vacations, holidays, etc.
GROSS vs. NET and Taxes
When discussing salary with your nanny, be VERY careful to distinguish between gross wage [before taxes are deducted] and net wage [the amount of the check or the amount you give her in cash]. It should be clearly understood whether you are withholding income taxes or not. Social Security and Medicare taxes ("the Payroll Taxes") are your responsibility to send to the IRS; be clear about whether you are deducting her portion from the gross or not. If you are going to work on a NET wage basis, please make sure you research your costs carefully.
Complying with the Fair Labor Standards Act
Nannies are to be paid on an hourly basis according to the Fair Labor Standards Act. Generally a nanny will agree to a fixed weekly wage for a specified number of hours, with overtime to be paid for hours outside the agreed work week.
Nanny employers, as well as employers of other types of domestic workers, need to be very careful in their definition of weekly wages in an employment contract to protect themselves against wage and hour disputes with disgruntled employees. The following examples are provided to illustrate how a compliant work agreement can be crafted.
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, $500 per week.
Compensation: Position will pay $9.09 per hour, with a weekly guaranteed minimum of $500 per week.
ANALYSIS: Linda's workweek is scheduled to be 50 hours. This is mathematically structured as 40 hours at $9.09 and 10 hours at $13.64 (1.5 * 9.09). Any hours worked in addition to the 50 scheduled would need to be compensated at the overtime rate of 13.64 per hour because Linda does not live with her employer.
SITUATION: The Martin family 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 $440 per week.
Compensation: Position will pay $8 per hour, with a weekly guaranteed minimum of $440 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 $8 per hour.
HomeWork Solutions (4nannytaxes.com) Free Nanny Tax Calculators can compute your hourly rate and provide suggested contract language for you.
Employers who state their domestic employee's pay only in terms of a weekly salary run the risk of having a court interpret this as a standard salary for a 40-hour workweek.
Remember, domestic employment by definition is non-exempt employment. This means you cannot offer a salary that covers any number of work hours, but must pay overtime for hours worked above 40 in a week. By structuring the work agreement with wages paid at an hourly rate and by agreeing to a guaranteed weekly minimum, the family is protecting itself from possible wage disputes and meeting the nanny's desire for a predictable weekly wage.
A nanny compensation package today is not limited to her salary. Many nannies ask for and receive the following:
- paid time off (PTO) (typically 2 - 3 weeks, some portion at family's scheduling discretion) PTO may be used for sick, personal and/or vacation days.
- health insurance (typically 50% paid by family for first year, often fully paid after first year)
- gym membership
- cell phones
- annual 'allowance' for child development courses, CPR and First Aide certifications and professional conference fees.
Changes to the Work Week
Another area which is often misunderstood involves payment for days not worked. A nanny should be able to expect that she will be paid for days she is prepared to work, even if you decide you do not need her services for a portion or all of any given week. Why? Two answers come immediately to mind. First, your nanny counts on her income to support herself, and possibly her household. Secondly, you have requested that your nanny reserve this time for you, which precludes her from getting other work during this time. If you are uncomfortable guaranteeing her a weekly guaranteed wage, however, let the nanny know in the Work Agreement how you will handle regularly scheduled days which are not worked due to no fault of the nanny, so that this does not come as an unexpected surprise, three months into the job.
Nanny surveys consistently report that the number one cause of job dissatisfaction and nanny turnover is the addition of job responsibilities and/or hours without appropriate compensation!
Performance Reviews & Raises
Reviews and the opportunity for increases in compensation provide an incentive for a nanny to continue to strive to do his or her best. Families are advised to consider their ability to set a schedule for review and salary adjustment and let the employee know when he or she can expect to be considered for an increase in compensation.
Families go to considerable effort to secure a quality care giver - don't forget the need to make sure that the employee knows how much the family values him or her and want to keep them!
Updated Spring 2011
Nanny Wage & Benefits: 4nannies.com