How do I calculate overtime for my salaried nanny? What about compensation for occasional overnights?
Many nannies are paid on a salaried basis. What this typically means is that the family has agreed to pay the nanny a pre-determined salary for a given number of hours in a pay period. The full time nanny work schedule is often more than 40 hours per week. It is important to remember, however, that nannies are NON-EXEMPT, hourly employees according to Federal Law and are entitled to overtime compensation for hours worked in excess of 40 per week. Minimum wage and overtime requirements are set, as a floor, by Fair Labor Standards Act (FLSA) and states may have stricter requirements of their own. If the household employee receives a “salary” that covers a work week of more than 40 hours, your employment agreement must explicitly state the regular and overtime rates of pay. (See our exclusive Hourly Rate Calculator for help.) Protect yourself… read on.
Setting an Hourly Pay Rate
Stating the employee wage in an hourly pay rate form helps the employer remain compliant with the FLSA and state minimum wage rules and avoids wage disputes with the employee. In a formal dispute (Wage & Hours Board Complaint), a work agreement that simply stipulates a weekly salary will be evaluated based on a 40 hour work week. Our exclusive Hourly Pay Rate Calculator simplifies the conversion of a periodic salary to an hourly wage.
HomeWork Solutions strongly encourages families to develop a written work agreement that documents all terms and conditions of employment. This should include agreed pay rate, hours of duty, paid holidays, vacation/sick/personal days paid and the benefit accrual method.
» Structuring FLSA Compliant Work Agreements
How, then, to calculate overtime for the salaried nanny?
Employers must first translate the nanny’s salary to an HOURLY PAY RATE. The means to do this will be different, depending on whether the nanny lives-in with the employer, or lives-out (come and go).
- Convert the nanny’s salary to a weekly one.
Weekly Salary: No Conversion Needed.
Bi-Weekly Salary: Divide the salary by 2.
Semi-Monthly (2x Per Month) Salary: Multiply by 24 (number of payments in a year) and divide by 52 (number of weeks in a year).
Monthly Salary: Multiply by 12 (number of payments in a year) and divide by 52 (number of weeks in a year).
- Calculate the number of hours worked in a week.
- If total weekly hours are less than 40, simply divide the weekly salary by the number of hours worked. Result is HOURLY PAY RATE. If total hours GREATER than 40, continue below.
Live In Nanny
- Divide the weekly salary by the number of hours worked. Result is HOURLY PAY RATE. For a live-in nanny, HOURLY PAY RATE = OVERTIME HOURLY PAY RATE
Live Out Nanny
- Subtract 40 from weekly hours worked. Result is OVERTIME HOURS WORKED.
- Multiply OVERTIME HOURS WORKED by 1.5.
- Add 40 to the result of Step 5.
- Divide the weekly salary by the result of Step 6. Result is HOURLY PAY RATE.
- Multiply HOURLY PAY RATE by 1.5, Result is the OVERTIME HOURLY PAY RATE
Now that the HOURLY PAY RATE has been determined, simply multiply the additional hours worked (above the regularly scheduled/compensated hours) by the HOURLY PAY RATE, applying the overtime differential if a live-out employee, to determine the additional overtime compensation due.
» Hourly Pay Rate Calculator Tool – FREE!
Compensation for Occasional Overnights
From time to time a nanny employer may require that the nanny stay overnight when parents are out of town. Employers and nannies alike often question how such overnight stays should be compensated, as the nanny is clearly sleeping for some portion of the time on duty.
Compensation for occasional overnights should be worked out in advance of the occasion, preferably memorialized within the written work agreement. The FLSA allows up to 8 hours of “sleep time” to be uncompensated for overnight care that is BOTH contiguous with a scheduled work day (24 hour+ shift) AND truly affords the nanny 8 hours of uninterrupted sleep. Overtime rules apply, so hours over 40 in the work week must be properly calculated for overtime. Additionally, it is common to provide an additional stipend to the nanny for the occasional overnight.
Let’s use an example. Nanny typically works Monday – Friday from 8 AM until 6 PM. She lives out and is paid $850 per week, or $15.45 per hour for the first 40 hours, and $23.18 for the 10 hours of overtime. She stays overnight Thursday – Friday. There are 14 additional hours, 8 that can be excluded if she really can sleep, and 6 to be compensated at the $23.18 overtime rate. Family’s written work agreement provides a $50 overnight stipend.
Non-contiguous overnight care – a Saturday night when the nanny is not scheduled to work either Saturday or Sunday – is typically much more generously compensated. The FLSA does not allow a sleep time exemption if the shift is less than 24 hours. At a minimum a nanny who is already scheduled 40 hours or more during the work week is entitled to her overtime rate for the weekend care. If nanny works Saturday 8 PM until Sunday 10 AM she must be paid for 14 hours. The family may or may not choose to provide an overnight stipend in this situation. Negotiating this type of compensation in advance is a good practice to avoid misunderstanding and conflict with the nanny.
These ‘formulas’ apply to older babies, preschoolers and older children who have a fixed nighttime routine and sleep through the night. Overnight care for infants requiring attention throughout the night – feedings, medications, diaper changes – is a different beast and the family should expect to pay a premium. When nanny’s sleep will be interrupted in these cases, the entire shift must be compensated at the appropriate hourly rate.
» More Information: Publication 926
» Fair Labor Standards Act (FLSA) Overtime Rules for Household or Domestic Workers