Experts agree, writing a nanny contract or nanny work agreement is a best practice in nanny employment. Why?
- Your nanny contract memorializes the agreement you made with your new nanny, an important document to refer back to later in a dispute, or when the details were simply forgotten.
- Your nanny contract documents the compensation agreement, including hourly rate, hours of work, and guaranteed base pay if applicable.
- The nanny work agreement outlines important benefits such as paid holidays, vacation and sick time agreements.
- The nanny contract articulates your household's policies, rules and procedures for calling out sick, inclement weather policy, household security, social media guidelines, confidentiality agreement and other important items you want to be sure there is no misunderstanding about.
- Your nanny contract should plan for the ending of the agreement, including notice provisions or pay in lieu of notice agreement, the return of family property, and a confirmation that employment is at will.
Getting the terms of your nanny agreement down in writing in the nanny contract is important protection for your family and for the individual you hire to care for your precious children.
Nanny Contract Resources:
Sample Nanny:Family Work Agreement Templates
Free Tip Sheet: The Nanny Work Agreement
More families consider privately hiring senior caregivers as a way to help their loved ones age in place in a safe and happy environment . This is uncharted territory for most people, and adult children who may have hired nannies to care for their children years ago wonder what they need to consider when hiring the senior caregiver.
1. Job Description and Household Rules
The first step is to do a needs assessment. Your loved one's needs are unique, and likely to change over time. What are the caregiver's duties? Are there any special skills required? Does your loved one have specific interests that you want to try to match? A senior who loves to play cards needs a caregiver who shares that interest. Does Mom prefer traditional Italian food, like to get out and about but just needs some assistance, or maybe is just addicted to the soaps? Consider your senior's personality and preferences, as well as physical needs.
Household rules are also important to consider. Do you allow smoking in the home? Do you want the doors locked at all times? Alarm system armed? Are you okay with your Dad going out and about with his aide? Are there dietary preferences?
2. Research Costs
When you hire a senior caregiver you are almost always on your own financially. Explore what the costs are for the type of care you are looking for. There are 3 general models, but endless variation, so do your homework!
- Agency caregivers are employees of the agency. The agency handles payroll, taxes, insurance and scheduling. Expect to pay $18 - 30 per hour to the agency for the typical senior caregiver - costs vary considerably by geography.
- Registry caregivers are recruited and scheduled by the registry but you pay the caregiver directly, or engage the registry to process the net payroll. The registry collects a fee for their services either on an hourly or daily rate model. Because you pay the caregiver, or outsource the payroll to the registry, in most states you become the employer, with tax and workers compensation insurance responsibilities. Be very careful here, many registries will tell you "don't worry, we do the payroll." The critical question is whether they are paying the caregiver's employment taxes. If they answer no, the family receiving the care is generally on the hook legally. Increasingly states are requiring that registries fully disclose this to their families.
- Private hiring - going on your own. This is the most economical means, but places considerable scheduling and record keeping responsibilities on the family. Expect to pay $12 - 20 per hour, and factor in the costs of payroll taxes and insurance.
3. Behavioral Interviewing
Good interviewing is critical to a good and safe job match. Ask questions of the applicants about how they have handled common situations in the past. Ask open ended questions and get the applicant talking!
4. Check References
This is just as important as the interview! Don't rely on the letters of reference the applicant brings with them. Talk to their references, and ask them good open ended questions too.
5. Background Check before Hiring!
A legitimate pre-employment background check will run $100 - $150 and must be done. There are far too many stories of theft, sexual abuse, and worse by caregivers of vulnerable seniors. You absolutely need to be able to confirm the identity of the prospective caregiver, and assure yourself there is no record of prior criminal history.
6. Plan Backup Coverage
How will you handle your caregiver's scheduled vacation? Unscheduled sick time? Many famlies who privately hire senior caregivers will make arrangements with an agency to cover vacation time. Unscheduled sick time, or the caregiver who just quits, is harder to pre-arrange.
7. Document Emergency Procedures
Your specific emergency plan should consider not only your loved one's possible physical and mental limitations, but also the everyday things that can happen. Who does the caregiver call when there is an emergency? What types of things whould you like to be notified of? When should emergency services be called? When should the primary care physican be consulted? Is it necessary to provide the caregiver with a limited medical power of attorney?
The Lamonica v. Safe Hurricane Shutters Inc. (11th Cir., 11-15743, 3/6/2013) ruling by the Eleventh Circuit Court confirmed that a worker's immigration status has no bearing on the worker's right to sue to recover unpaid overtime pay. The decision affirmed a lower court ruling in favor of the undocumented workers that awarded unpaid overtime and damages.
Household employers often hire undocumented workers, especially as nannies and housekeepers. Many of these household employers assume, incorrectly, that these workers are not protected by the Fair Labor Standards Act (FLSA). The FLSA regulates minimum wage, overtime, and employer recordkeeping and compensation requirements for hourly (non-exempt) workers. Facilitating the rights of workers to press claims for unpaid wages and unpaid overtime is an enforcement priority of the Obama Administration's Department of Labor.
Household employers who fail to keep accurate and contemporaneous records of hours worked, and who fail to compensate household employees for overtime or extra hours worked, leave themselves wide open to Wage and Hour grievances by disgruntled employees. In the Lamonica case, one of the two workers is an undocumented alien and both workers failed to report their wages and pay taxes on their income. The Court found that the workers' immigration status and failure to pay taxes were immaterial to their right to seek financial compensation for the work they had performed for Lamonica.
Household employers are invited to download our free tip sheet, Household Workers and the FLSA, to learn how to protect themselves from these types of grievances.
Parents of younger school-aged children dread the summer holiday. Mom and Dad still need to go to work - what are their summer child care options?
As a mom of three I tried it all. Sequential summer day camps - a drop off and pick up nightmare! Family day care - hard to find when every other mom and dad are competing for limited spots! Sleep away camp - expensive! Home Alone? Not an option! For many summers we found that hiring a summer nanny was the perfect solution.
Our summer nannies were all young women on summer break from college. We did the live in and live out routes - they both work. Hosting a live in nanny for 8 - 10 weeks isn't nearly the concern that a full time live in presents. The loss of family privacy was temporary - it was almost like having a relative visit from out of town. We had friends who had success simply hiring a temporary nanny looking for work in the local job market.
In our experience, the summer nannies from out of town were the most enthusiastic. Living in the DC suburbs there were many interesting (and mostly free) things to do and the children loved the variety. Museums downtown, plantation tours, berry picking, visiting battlefields and the like entertained all. Best yet many days were spent hanging out with neighborhood and school friends at the pool, playing games, putting on plays, and all manner of unorganized activities that fostered creativity.
Here are some tips if you decide to go the summer nanny route:
- Recruit early - most college students make summer work plans by mid April.
- Plan to have your nanny start at least a week before summer vacation starts. This allows for acclimation, becoming familiar with each other, and learning family routines.
- Insurance - if your summer nanny will be driving your family car, get her added to the policy!
- Space concerns - the summer nanny needs a bit more room than your mother in-law visiting for the week. Make drawer and closet space, and room in the bath for her personal items.
- Payroll - nanny tax obligations kick in if you pay $1800 or more to the summer nanny. That means almost everyone who goes this route becomes an employer and has to deal with this. Tip - outsource to HomeWork Solutions!
- Reward a job well done! When it is time to part, these students truly appreciate a letter of reference, a small gift from the children (photo books work great), and a financial expression of appreciation.
Happy children, a stress free summer for mom and dad, and valued work experience for the student - a summer nanny is a win-win solution!
- NannyNetwork.com - searchable directory of nanny placement agencies that can help you with recruitment.
- NannyVerify.com - background checking any caregiver is a must.
- 4nannytaxes.com - free tax calculator to help with your budgeting, and services to handle the nanny taxes.
Celebrate Spring - Nanny Style!
For those celebrating Easter, Passover, or just plain Spring … Do you have any special projects planned with your nanny-kids?
Creativity, and fostering it in their charges, is one of the most valued qualities of our nannies. It is an important tool nannies use to help children learn - and have fun while doing it! Nannies and other child care providers become extra creative during these special celebrations ... like Easter! Are you doing anything special with your charges this year?
HomeWork Solutions is not all about Nanny Taxes, at least not all the time! We would love to see your ideas and pictures and how you celebrate the spring holidays - Nanny Style!
Share your pictures/ideas with us, just upload them on our Facebook page under the title "Easter" … and like our page while you are there!
U.S. Citizenship and Immigration Services (USCIS) released the new I-9 Employment Eligibility Verification Form March 8, 2013. This immediately replaces the prior version with an expiration date of August 2012.
Federal law requires all employers, including household employers, use the new I-9 to verify the identity and employment authorization eligibility of their employees.
The new form provides more detailed instructions on acceptable documents, as well as more extensive documentation. Importantly it clearly advises that Social Security Cards containing restrictions, such as “Not Valid For Employment,” “Valid for Work Only with INS Authorization,” or “Valid for Work Only with DHS Authorization” are not acceptable as List C documents. These restricted use Social Security Cards are commonly issued to au pairs and foreign students.
The new I-9 form is available to all clients on our website or will be emailed to you upon request.
Personal finance expert Jane Bryant Quinn recently discussed the "nanny taxes" on the popular TV show The Street - stressing that these are not just for nannies! We have posted often about the obligations of families who hire cleaning ladies, maids, and senior caregivers to report and pay the employment taxes. The IRS recently announced an IRS Nanny Tax amnesty program, promising stepped up enforcement going forward.
Ms. Quinn's presentation is short and totally on point:
HomeWork Solutions has worked with thousands of families nationwide for over 20 years helping them understand and solve their "nanny tax" headaches. We offer free telephone consulations - call us at 800.626.4829 today. Go Ahead - Simplify!
Nanny taxes are due with the family's personal income tax filing - April 15th this year. The Associated Press recently published this primer for families who employ household workers, consulting with HomeWork Solutions in the preparation of the article.
All too many families believe they can avoid these taxes by calling their caregiver an independent contractor - a risky proposition when the IRS is both offering nanny tax amnesty and signaling stepped up enforcement.
Other families wait too long, believing compliance is just an additional form on their personal tax return and not realizing that W-2 forms must be presented to their household workers so they can complete their tax filings too, and overlooking state unemployment tax filings.
HomeWork Solutions' trained nanny tax specialists are available to help you catch up with your 2012 Nanny Tax obligations. We can also assist you to stay on track going forward, as we are currently preparing nanny tax filings for the first quarter of 2013. Call us today for a free consultation - 800.626.4829.
Direct hiring of senior caregivers by families continues to increase, and families have questions about minimum wage, overtime and whether to pay the elder caregiver when they are sleeping. US News and World report recently noted that "by a 9-to-1 ratio, people prefer to stay in their homes as they get older rather than moving into an institution." They often become household employers as they hire individuals to help them age in place.
The following discussion is in regard to FEDERAL law. Many states extend the Federal minimum wage and overtime coverages. The stricter standard always applies!
Minimum Wage and Overtime
The Fair Labor Standards Act (FLSA) applies minimum wage and overtime protections to household or domestic service workers, with some notable exceptions.
Live-in Domestics: Domestic service workers who reside with their employers are exempt under the FLSA from overtime premiums. The live-in senior caregiver must be paid for all hours on duty, they are simply not entitled under Federal law to the "time and one half" premium.
Companionship Exemption: Bona fide companions are exempt from both minimum wage and overtime in the FLSA, yet they remain employees subject to Social Security and Medicare taxation. The FLSA defines companionship services as "services which provide fellowship, care, and protection for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs." These services may include help with bathing, dressing, eating, etc. Some general household work may be performed but must be "incidental" - meaning no more than 20% of the caregiver's time may be spent in general household work for the exemption to apply. Where the 20% limitation is exceed the employee must be paid overtime.
Many senior caregivers provide around the clock care for several days at a time. These caregivers typically do sleep when the individual requiring the care does. How is this time compensated?
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 senior caregiver a minimum of 5 hours of uninterrupted sleep.
Changes to the FLSA Proposed
The information provided above is valid as of the blog publication date. The US Department of Labor published proposed changes to the definition of "companionship services" in December 2011 that they are expected to make a decision on in April 2013. HomeWork Solutions is watching this issue carefully and will report here if and when the situation changes.
There is good news for household employers who pay their nanny or senior caregiver "on the books." These employers are often eligible for tax savings on their personal income tax returns. And these tax savings often go a long way towards offsetting the household employer taxes they paid!
There are two popular tax savings strategies available to families employing a nanny or other caregiver. Families are entitled to these tax breaks as long as long as both spouses are working or a full-time student, and the caregiver is employed to take care of a dependent so the parents can work. Your elderly loved one may also be a dependent for tax purposes, so long as certain criteria are met. The families must also report and pay taxes on the caregiver’s wages to be eligible for either tax break.
Dependent Care Account, also commonly called Flexible Spending Account
Many businesses offer a Dependent Care Account as part of their flexible benefits plan. A family can contribute up to $5,000 of pre-tax earnings to the account to be used for dependent care expenses that are necessary to enable the parents to work. These earnings are sheltered from Federal income tax, FICA taxes and most state income taxes.
A family with an adjusted gross income of $80,000 per year could save $1,250 in Federal taxes and perhaps an additional $250-$700 in state taxes. Families in the highest tax bracket could realize a savings of almost $2,000 in Federal taxes alone. To put this in perspective, families pay about 10% of a caregiver’s wages in various employment taxes, so their total employer payroll taxes for a caregiver earning $20,000/ year is about $2,000.
Child and Dependent Care Tax Credit
If your employers do not offer a Dependent Care Account, you can claim a Tax Credit for Child or Dependent on your personal tax return. The Child Care Credit allows you to apply the first $3,000 of expenses ($6,000 if you have 2 or more children) you paid for qualified child/dependent care towards a tax credit. For families earning over $43,000/ year in 2012, the credit is 20% of the expenses. So most employers would qualify for a $600-$1,200 tax credit.
A tax credit is not a deduction; a tax credit directly reduces the amount of tax you owe the IRS at the end of the year.
You can find more details about tax breaks available to household employers @ 4nannytaxes.com. Click the Resources tab and go to Tutorials.
In addition, IRS Publication 929 contains more information about Dependent Care Accounts. IRS Publication 503 contains information on the Child and Dependent Care Tax Credit. IRS Publication 501: Exemptions, Standard Deductions and Filing Information will help you understand if an elderly loved one qualifies as your dependent.
Do you pay your household employee's health insurance premium? Speak to your tax advisor about the Small Business Health Insurance Tax Credit - you may qualify!