Are Nannies Entitled to Minimum Wage?

At first glance, it may appear that the Department of Labor excludes household employers from paying their household employees minimum wage, but for those who keep reading, it becomes clear that nannies are indeed, subject to minimum wage laws.

In fact, domestic service workers, including nannies, cooks, housekeepers and full-time babysitters are all covered under the Fair Labor Standards Act (FLSA) if they work a total of more than 8 hours per week for one or more employers OR if they earn more than the calendar year threshold which is adjusted by the Social Security Administration each year. For 2012, that threshold was set at $1800.

The Fair Labor Standards Act is the federal law that establishes minimum wage, overtime, recordkeeping and youth employment standards. Since nannies are covered under the FLSA, these standards apply to them and the parents who employ them.

With regards to minimum wage, nannies are entitled to earning at least minimum wage for every hour worked. Since state and federal minimum wage laws vary, the highest minimum wage rate applies. But a discrepancy in minimum wage rates can even be found within states. For instance, some municipalities like San Francisco have higher wage rates than California. In this case, the highest wage rate applies, according to Tom Breedlove of Breedlove & Associates. Whenever there are two or more minimum wage rates, the highest wage rate always prevails.  “So domestic workers in Georgia, Arkansas, Wyoming and Minnesota are still entitled to the higher federal rate of $7.25 and an employee in Los Angeles is entitled to the higher California rate of $8.00,” according to Breedlove.

Another part of the Fair Labor Standards Act law that directly impacts a nanny’s salary is the overtime standard. Live-out nannies who work more than 40 hours per 7-day period are entitled to overtime pay at the rate of 1.5 times their base hourly wage rate. In some states, including New York, Maryland, Massachusetts, Minnesota and Maine, live-in nannies are also entitled to overtime pay, however when the overtime differential kicks in can vary from state to state.

Since nannies are covered by the Fair Labor Standards Act, employers are also required to keep accurate time records that indicate all hours worked by an employee. Some families require their nanny to keep a daily log to satisfy this requirement, while others provide a sign in/sign out card for their employee’s to sign upon starting and finishing their work day.

For some nannies and families, determining a weekly salary makes payroll easier, but for the salary to be compliant with the Fair Labor Standards Act, the salary must be translated into hourly wage rates. The first 40 hours of work in the 7-day period must be paid at the wage rate equal to or greater than the prevailing minimum wage rate and for any hours over 40, the overtime wage rate must be paid at 1.5 times that hourly rate (view a sample calculation courtesy of Breedlove & Associates here). It is important that household employers are complaint and uphold FLSA standards with regards to overtime pay because there is no statute of limitations placed on when an employee can file a wage dispute claim.

For nannies and parents concerned about FLSA compliance, they should consult the US Department of Labor Wage and Hour Division or a household payroll and tax expert firm like Breedlove & Associates. Having a household tax and payroll expert handle your household employee’s payroll and taxes can ensure you are FLSA compliant and following all applicable local, state and federal labor wage laws.

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