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. Additionally some states and localities have mandatory paid time off or paid sick leave laws that must be followed.
The nanny will typically expect to be paid either every week or every other week (more information on nanny pay frequency). A full time nanny will expect to be paid her regular wage for 52 weeks a year, even if the family takes additional holidays without her. The nanny’s paycheck should NEVER be delayed or forgotten.
A typical nanny or housekeeper/household manager compensation package today is not limited to her pay check. Many household employees ask for and receive the following:
- Paid Time Off (PTO): (average paid time off is 5 – 15 days, some scheduling at family’s discretion)
- Health insurance: (typically 50% paid by family for first year, often fully paid after first year up to limits under QSEHRA rules). Health insurance benefits require special W-2 reporting.
- Reimbursement for mileage if nanny is required to use personal automobile to transport children
- Six or more Federal typical paid holidays (New Years, Memorial Day, July 4, Labor Day, Thanksgiving and Christmas always).
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).
PTO time, vacation time, and sick time all typically accrue, or 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 (2 weeks) will accrue, or earn 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 x hours (or days) can carry over from year to year, or 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 4 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 time (not sick time) at 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.
Many families assist their household worker with health insurance and occasionally retirement savings. The family may pay all or part of the employee’s health insurance costs as a tax free transaction.
» More Information on Health Insurance
HomeWork Solutions strongly encourages that families hiring a household worker take the time to establish a written work agreement that discusses all aspects of the employment package, including salary and benefits, before the employee begins working. Sample agreements are available at this website.
HomeWork Solutions’ payroll service will assist household employers in the computing of PTO/Vacation time and maintain the accrual/disbursement records.
» Ten Tips for Writing the Nanny Work Agreement
» Free Sample Nanny Work Agreements (Employment Contracts)