Fair Labor Standards Act (FLSA) Overtime Rules and Domestic Employment
|Fair Labor Standards Act (FLSA) overtime rules and domestic employment are often misunderstood by the household employer. The temptation is to either agree to a weekly “salary”, agree to “average hourly rate” (pay $15 an hour for 45 hours for example) and or to average weeks (pay bi-weekly and average the two weeks hours to avoid overtime in uneven work week schedules). All of these can get the household employer in trouble in a wage dispute, so we’ve outlined an easy guide for FLSA overtime rules for household employees.
Domestic (household) employment, as defined in the FLSA, is classified as non-exempt employment (employment subject to both minimum wage and overtime rules). Domestic workers who live out (come-and-go) have overtime calculated as 1.5 times their hourly wage for all hours in excess of 40 in a week. Domestic workers who live in with their employer have their overtime calculated at their regular hourly rate – there is no overtime rate differential. (Some states, including New York, California, New Jersey, Hawaii, Minnesota and Maryland, apply an overtime differential to live in domestics.) US Department of Labor offers a free iPhone app suitable for household employees, using GPS technology, to help employee’s document their hours worked. This documentation is used when the employee pursues a “Wage and Hour” complaint to force the employer (or former employer) to pay unpaid overtime and other wages.
Crafting a FLSA Compliant Work Agreement
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 so you are able to correctly follow the FLSA overtime rules for household employees.
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.
HomeWork Solutions Inc.
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, $650 per week.
Compensation: Position will pay $11.82 per hour, with a weekly guaranteed minimum of $650 per week.
ANALYSIS: Linda’s workweek is scheduled to be 50 hours. This is mathematically structured as 40 hours at $11.82 and 10 hours at $17.73 (1.5 * $11.82). Any hours worked in addition to the 50 scheduled would need to be compensated at the overtime rate of $17.73 per hour because Linda does not live with her employer. The weekly guarantee is the equivalent pay for 50 hours.
SITUATION: The Martin family of Austin TX 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 $500 per week.
Compensation: Position will pay $9.09 per hour, with a weekly guaranteed minimum of $500 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 $9.09 per hour.
Overtime rules and domestic employment needs to be addressed in the compensation agreement. 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 work week. 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.
Compliance to FLSA overtime rules for household employees is an easy 3-step process:
- Agree on hourly rate (and weekly base guarantee if appropriate).
- Keep record of hours worked. Notations in a Month-at-a-Glance style calendar work just fine. There are some free time-card applications on the internet for the more tech-savvy nannies & families.
- Pay for all hours worked at the appropriate rate.
» FREE Calculator: Calculate Hourly Wage
» FAQ: Defining Non-Exempt Employment
» State Minimum Wages for Household Employment
» US Department of Labor FLSA Fact Sheet