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Am I required to offer my nanny benefits such as vacation time, sick time, or paid time off?
US employers are not required to offer benefits such as paid vacation time, paid sick time, medical or life insurance, or retirement savings plans unless stipulated by state or local laws. However, employers with full-time, permanent staff find that offering some basic level of benefits keeps them competitive in the employment market, attracting and retaining the best staff and helping your nanny avoid burnout. Do note that some states and localities have mandatory paid time off or paid sick leave laws that must be followed.
Nanny’s Salary and Benefits
Household employers understand that offering a basic level of benefits helps attract and retain the best staff.
Your nanny will typically expect to be paid either every week or every other week, but pay frequency is usually governed by state law. A full–time nanny may expect to be paid her regular wage for 52 weeks a year, even if the family takes additional holidays without her. This is commonly referred to as guaranteed pay and is standard in the nanny world. The nanny’s paycheck should NEVER be delayed or forgotten.
Guaranteeing a certain number of hours per week ensures your nanny gets paid for the hours they expected upon employment. Guaranteed hours also help both you and your nanny know what to expect in terms of overtime hours and compensation. For example, if you guarantee your household employees 40 hours a week and they work 50 hours one week, you’ll need to provide extra compensation for the additional 10 hours. It’s recommended to pay your nanny at least 1.5 times their hourly rate for overtime hours, and this premium pay for overtime hours is required in most states.
A typical nanny, housekeeper, or household manager compensation package today is not limited to a paycheck. Many household employees ask for and receive all or a combination of the following standard nanny benefits:
Paid Time Off (PTO):The average number of days given for paid time off is five to 15 days. Employees can use their PTO on days they wish to have off and still get paid. PTO is often used for vacations. Families usually require PTO days to be requested in advance so coverage can be found and planned for ahead of time.
Sick days: Sick days are a common courtesy for any employer to provide. Sick days are not federally required, though many states have their own laws specifying how many days should be offered. Sick days can be used without advanced notice, so it’s best to have backup child care for these days. Families can choose whether they want to provide paid or unpaid sick days.
Health insurance:Families can choose to fully cover a nanny’s health insurance costs, or partially reimburse them for the costs of their plan. Typically 50% is paid by the family for the first year, often fully paid after the first year up to limits under QSEHRA rules.Health insurance benefits require special W-2 reporting.
Reimbursement for mileage: If the nanny is required to use a personal automobile to transport children, it’s best to reimburse them based on mileage rates established by the IRS. Instead of asking their nanny to use a personal car, some families choose to allow their nannies to use an extra family car for transporting kids. In this case, you’d want to ensure the car has gas so your nanny doesn’t have to fill up the tank.
Paid holidays: Families typically offer six or more Federal typical paid holidays, including New Year‘s Day, Memorial Day, July 4, Labor Day, Thanksgiving, and Christmas. Another option would be to allow the household employee to be paid on five to seven holidays of their choice, which is beneficial for employees who celebrate holidays that aren’t federally recognized. Paid holidays occur when the holiday falls on the nanny’s regular workday. For example, if a nanny typically works on Tuesdays and Christmas falls on a Tuesday, they would have that day as a paid day off. It’s important to note that paid holidays are separate from paid time off.
A recent trend in developing the nanny compensation package is to offer Flex Days or PTO days in lieu of separate banks of paid vacation and sick days. The Flex Days are paid days to be used at the nanny’s discretion. We usually see 10–15 days in a full–time worker’s agreement, and they can cover sick days, personal days, and vacation — pre-scheduled according to your agreement.
Accrued Time Off
PTO time, vacation time, and sick time all typically accrueor accumulate over time. Many families restrict the use of paid time off at the beginning of employment, generally 60 to 90 days. An employee who is offered 10 paid days off per year will accrue 0.1923 days per week, or slightly less than one day per month. Some employers establish a “use it or lose it” policy where only a certain number of hoursor dayscan carry over from year to yearor anniversary dates.
If you offer 10 days PTO per year, you may restrict the annual carryover to 5 days for example – so the worker cannot hoard PTO and take a four-week trip at some point. You may also consider limiting the maximum days permitted at a time — a week for example — so you don’t have long periods to find alternate coverage.
Typically, a worker who is both beyond the probationary period and voluntarily separating from employment is paid their unused accrued PTO and vacation timeat the time of separation if there is a positive balance in their account. In some states, payment of accrued vacation time is mandated under state employment law.
HomeWork Solutions’ Nanny Payroll Services
HomeWork Solutions strongly encourages families hiring a household worker to take the time to establish a written work agreement that discusses all aspects of the employment package, including salary and benefitsbefore the employee begins working.
We can simplify this for you! HomeWork Solutions’ household employee payroll service will assist household employers in the computing of PTO/Vacation time and maintain the accrual/disbursement records.