Nanny Wage and Overtime Calculations Nanny Wage Rate Calculations
In accordance with The Fair Labor Standards Act of 1938 (1974rev 29 CFR 552.2), child care employees (nannies) are entitled to minimum wage and overtime pay. Overtime must be paid at 1.5 times the standard hourly wage for all hours worked over 40 in a 7 day workweek. A nanny may be paid a salary, however overtime must be documented in the written work agreement between the parties - and the salary must equal at least the minimum hourly wage rate.
For example;
A nanny and family agree to a gross salary of $550 per week for a 50-hour work-week.
The standard wage for the first 40 hours is $10.00 per hour;
The overtime wage for the additional 10 (overtime) hours per week is $15.00 per hour;
And the total weekly salary = $550.
No limit is placed on the number of hours worked in a 7 day workweek, as long as the employment contract is fulfilled and the employee is fairly compensated.

"Why should I bother to figure the standard hourly
    wage rate and overtime hourly wage rate beforehand?
      Can't I just do the calculation on a weekly basis?"


If you choose to figure overtime on a week by week basis, rather than using the method above to document the hourly wage rates before employment begins, a different calculation method, as specified by the Department of Labor (see below), will apply. The DoL's method of computing the standard wage rate and overtime wage rate will result in a significantly higher total weekly salary being paid. Failure to comply with these rules and regulations may leave a family liable for unpaid wages and damages under the FLSA and DoL regulations.
For example;
Using the DoL's method to compute wage rates on a week by week basis;


A nanny and family agree on a gross salary of $550 per week for a 50-hour work-week.
The standard wage rate is the total salary divided by the total hours worked:
$550 / 50 = a standard wage rate of $11.00 per hour
and the weekly standard salary = $550.00;
The overtime wage is then computed (after-the-fact) by multiplying the 10 overtime hours by 1/2 the std. wage rate:
10 X ($11.00 X .5) = $55.00 overtime salary
And the total weekly salary is ($550.00 + $55.00) = $605.00

That's the law.

By taking the time to enter into a family-nanny work agreement that details the employee-employer relationship - including wages & hours - a family and nanny protect eachother and take a giant step towards avoiding misunderstandings in the future.
NOTE:
On september 11, 2013, the Department of Labor announced new regulations which will apply to the wages of Live-In care providers. Beginning Jan 1 2015, live-in nannies must be compensated the same way that live-out nannies are now, with time-and-a-half (overtime) wages paid for all hours worked over 40 hours in a workweek. See the Dept. of Labor website for details.


Use Our Nanny Wage Rate Calculator

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"Can I get around all of these complicated requirements...
  maybe by working without a contract or just agreeing to terms verbally?
"

According to the US Department of Labor:
Overtime Pay May Not Be Waived: The overtime requirement may not be waived by agreement between the employer and the employee. An agreement that only 8 hours a day or 40 hours a week will be counted as working time also fails the test of FLSA compliance. An Announcement by the employer that no overtime work will be permitted, or that overtime work will not be paid for unless authorized in advance, also will not imapair the employee's right to compensation for compensable overtime hours that are worked.

Requirements
Unless specifically exempted, employees covered by the Act must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the Act on the number of hours employees aged 16 and older may work in any workweek. The Act does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, as such.

The Act applies on a workweek basis. An employee's workweek is a fixed and regularly recurring period of 168 hours -- seven consecutive 24-hour periods. It need not coincide with the calendar week, but may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees. Averaging of hours over two or more weeks is not permitted. Normally, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the wages were earned.

The regular rate of pay cannot be less than the minimum wage. The regular rate includes all remuneration for employment except certain payments excluded by the Act itself. Payments which are not part of the regular rate include pay for expenses incurred on the employer's behalf, premium payments for overtime work or the true premiums paid for work on Saturdays, Sundays, and holidays, discretionary bonuses, gifts and payments in the nature of gifts on special occasions, and payments for occasional periods when no work is performed due to vacation, holidays, or illness.

Earnings may be determined on a piece-rate, salary, commission, or some other basis, but in all such cases the overtime pay due must be computed on the basis of the average hourly rate derived from such earnings. This is calculated by dividing the total pay for employment (except for the noted statutory exclusions) in any workweek by the total number of hours actually worked.

Where an employee in a single workweek works at two or more different types of work for which different straight-time rates have been established, the regular rate for that week is the weighted average of such rates. That is, the earnings from all such rates are added together and this total is then divided by the total number of hours worked at all jobs.

Where non-cash payments are made to employees in the form of goods or facilities, the reasonable cost to the employer or fair value of such goods or facilities must be included in the regular rate.


Typical Problems
Fixed Sum for Varying Amounts of Overtime: A lump sum paid for work performed during overtime hours without regard to the number of overtime hours worked does not qualify as an overtime premium even though the amount of money paid is equal to or greater than the sum owed on a per-hour basis. For example, no part of a flat sum of $90 to employees who work overtime on Sunday will qualify as an overtime premium, even though the employees' straight-time rate is $6.00 an hour and the employees always work less than 10 hours on Sunday. Similarly, where an agreement provides for 6 hours pay at $9.00 an hour regardless of the time actually spent for work on a job performed during overtime hours, the entire $54.00 must be included in determining the employees' regular rate.

Salary for Workweek Exceeding 40 Hours: A fixed salary for a regular workweek longer than 40 hours does not discharge FLSA statutory obligations. For example, an employee may be hired to work a 45 hour workweek for a weekly salary of $300. In this instance the regular rate is obtained by dividing the $300 straight-time salary by 45 hours, resulting in a regular rate of $6.67. The employee is then due additional overtime computed by multiplying the 5 overtime hours by one-half the regular rate of pay ($3.335 x 5 = $16.68).

- U.S. Dept. of Labor - Overtime Fact Sheet (PDF)


Important Note: While "live-in" household employees do not have to be paid overtime they are entitled to "fair and equal pay".
UPDATE:
On september 11, 2013, the Department of Labor announced new regulations which will apply to the wages of Live-In care providers. Beginning Jan 1 2015, live-in nannies must be compensated the same way that live-out nannies are now, with time-and-a-half (overtime) wages paid for all hours worked over 40 hours in a workweek. See the Dept. of Labor website for details.

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