Nanny Users: PTO, Overtime, Taxes. Help!

[LittleGriff]

So we dashed into our nanny situation in September without completely specifying the terms in advance. (Other than the hourly rate and hours/week.) I was hunting for work+contracting & hubby was a contractor so our own situation felt too precarious to know what to expect more than a month in advance.

But it looks like I will start a real job sometime in mid-Nov and I want figure out how we are going to handle PTO, overtime and taxes. Would LOVE help/feedback.

1. Overtime - expect to pay 1.5x regular hourly wage after 40hrs/week. Would love to compensate with PTO (1.5x) as well since my hours will be a bit variable over the next 2 mo's. Is that kosher? (So for example, this week I really only need her 24 hours but in 3 weeks I'll prob need 45hr/week. Can I pay her at the normal rate for 40 hrs this week and then apply the 16 hours paid but not worked to the extra 7.5 hours (5*1.5) three weeks from now?) The benefit is to smooth her income/our check writing.

2. PTO - I want to do right by my nanny but we currently do not get PTO ourselves/vacation time ... hopefully this will change eventually but for now it makes us wince to give PTO if we are not getting paid/paying for subsitute childcare. Are we ungrateful wretches? How do you guys handle this?

3. Taxes - argh. I always do my own taxes so I'm sure I can figure this out but any favorite starting places/resources? I wonder what the rate of compliance is on this ...

4. Health benefits - we are not providing this ... ran into some websites indicating that we should ... is this usual?

And for what it's worth, while I like our nanny, I don't feel desperate to retain her. That is, we are not quite wowed enough yet to want to go above and beyond on benefits, just want to be in line with typical expectations.

Thanks!

[Michelle Renee]

Everyone is different but I think above all if you like her and your children like her - be kind, show appreciation and respect.

Offer treats when you can if you cant do overtime etc -
If she gets her nails done - get a gift certificate, keep her favorite soda around.
Little things -

We do 2 weeks paid time off (1 week her choice, 1 week ours) and as a teacher I pay for holidays if they fall on a work day and I never dock her for a sick day as long as she works with me on it. (helps find sub care, calls off with enough time off, etc)

Good Luck

[mamasaurus]

I had nannies for about 6 years.

About overtime - generally, the Department of Labor (assuming you are in the US) doesn't like when you carry over hours from one week to the next. I would recommend contacting a nanny tax service for some advice. This is a good one: http://www.4nannytaxes.com/

About PTO and health insurance, this is how I would do it:

1. Figure out your total nanny/childcare budget for the year. So, let's say you have $30,000 you can spend on a nanny/childcare in one year.

2. Decide if you are going to offer health insurance, and find out how much that costs for a year. Let's say it's $150/month x 12 months = $1800. Subtract that from the $30,000 to get $28,200.

3. Decide if you are going to offer some PTO. Let's say you offer 2 weeks. You will need to take out $$$ to pay for the substitute childcare you will use during those 2 weeks. Let's say it's $500/week for the substitute childcare X 2 weeks = $1000. Subtract that from $28,200 to get $27,200.

4. Divide the $27,200 by 52 weeks to get $523.00/week. This is what you can pay the nanny each week, including taxes. Now, I use QuickBooks for business, and I have the payroll service. I just went into there and did some calculations on paying an employee, and $523.00/week came out to about $12.00/hour for 40 hours = $480.00. then add the payroll taxes on top of that. If you want to do overtime, you will have to do some more figuring to make it work out.

Bottom line - nannies like perks. They like health insurance, PTO days, etc. I'm sure there are nannies who would rather be paid the $15.00/hour with no perks. But many would like the $12.00/hour with perks. All you need to do is figure out your yearly budget for the nanny (and don't forget the sub when nanny has PTO days) and work backwards.

I hope that made sense.

[RockStarMom]

I have employed a nanny and I've been a nanny myself for years so here's my experience:
-I have never given nor received a higher rate for overtime work...as far as I know it is not done(in my area).
-Are the hours going to vary so greatly on a regular basis? My employers have occasionally rolled over the paid, unworked hours to another week, but I would talk to her about what she would prefer. That is a lot of hours(16) you mentioned, and I would make sure they don't accumulate too much. Typically, my employers commit to pay me for a certain number of hours each week, and they pay me even if they don't use all the hours.
-I do not get paid sick days. I do get paid while the family I work for is on vacation in the spring. For the winter holiday, we discuss together how many days I will work, and I am not paid, but do get a generous holiday bonus.
-I've always paid/been paid under the table so no experience with that or health benefits.

[LittleGriff]

Super answers, mamasaurus and rockstarmom. I find as I learn about what other people do I swing from feeling super stingy to super generous and back ... and back. Phew! I really want to do right by my nanny but not break our finances in the process. I find it really hard to know what to do ...

(and btw, the hours will not vary greatly on a regular basis - the next 3 weeks are just going to be odd as I wrap up contracting and start a long-hour job. sort of a bummer for us to pay for a full week when we only need to 2 days and then pay a lot of overtime in the future.)

[MtBikeLover]

I have a nanny and here is our arrangement:

1 - She gets a set salary for 45 hours a week of work. If she leaves early some days, then I have asked if it is ok to roll some of that time over in case another week I need her to stay late. She is fine with that.

2 - PTO/Vacations - I do 2 weeks vacation - 1 week her choice, 1 week mine. I asked for 30 days notice of when she wants to take her week so that I can make other arrangements or plan to take time off from work.

3 - PTO/Holidays - She gets 8 paid holidays off per year (the same ones I do).

4 - Health insurance - I do not provide health insurance.

5 - Taxes - I pay under the table.

Regarding time off, in reality, my nanny will actually get 8-10 weeks off per year. My mom is retired and comes at least 4 times per year for a week at a time. Plus, I am divorced and ex is supposed to take the kids for 3 weeks in the summer. Plus, I get 3 weeks vacation at my job. I plan to pay my nanny her regular pay those weeks even though I won't be needing her.

[rivkah]

I'd like to encourage you to comply with tax laws. Many people do not, but that doesn't make it right.

This is a good place to start:
http://www.irs.gov/businesses/small/...=97877,00.html

[Evan&Anna's_Mom]

Although we not currently employing a nanny, here is what I have done in the past:

1. Comply with state labor laws regarding over time. Here, that means anything over 40 hours is time and a half for an hourly worker. However, if you pay a salary for X hours a week, you don't have to pay overtime. Of course, that also means you will pay that salary on weeks when you use fewer hours as well. For us, it was better to have an hourly arrangement. Since my hours varied, we guaranteed a min. number of hours (25) per week and then worked from there with an expectation of 1 week's notice for hour shifts. During the summer we did flex a great deal from week to week but made sure that at the end of the month the number of hours were roughly usual so that her monthly pay averaged out. She knew this was the plan going into the job.

2. We gave 2 weeks of PTO -- one at our choice and one at her's. Nicely enough for us, mostly we all agreed on vacations around school holidays and times when I wanted to take off anyway.

3. We did not offer health insurance and none of the nannies we interviewed were expecting it.

4. For taxes, we used a bookkeeping service to handle payroll and taxes. For the $35 a month they charged it was worth knowing it was done right. I was a small business owner at one point who messed up a year's worth of tax documents/payments for payroll and it took nearly 5 years to deal with the fallout. Never again.

I think overall the best thing to do is communication clearly and make sure she is comfortable and feels your arrangements are fair. You don't want her to resent your treatment of her and take it out on the kids.

[handsandfeet]

I work part time (4 days a week), and my hours differ every week (some weeks 20 hours, some 30). So we arranged to pay our nanny a salary ($500 a week). This means some weeks she will make more money per hour than other weeks. It seems to work in her favor, and she is fine with it. I do occasionally have to stay at work into the late evening, and if so I pay her cash per hour (so it doesn't complicate the tax stuff). This is rare, though. We do pay taxes with her as our employee. Her check is the same amount every week. If she is ill, she still gets paid for those days, but our arrangement is that she will then help us out here and there in other ways to "pay" us back -- i.e. she will stay a little extra and clean the bathrooms, or will come in for a few hours during a vacation week. The big bonus is that I get 6 weeks vacation, so I pay her for all of those weeks and do not have her come. Plus she gets all major holidays off with pay. We do not pay health insurance and she didn't expect it. I think the most important thing is that you discuss everything and come to an agreement. I put everything in writing and went over it with her, and we talked about what works for us. We haven't had any issues in 6 months. When she was out sick with the swine flu, it was good because she didn't rush to come back too soon (and thus expose us to the virus), because she knew she wasn't losing a paycheck during her time off.

[mamasaurus]

Originally Posted by RockStarMom

-I have never given nor received a higher rate for overtime work...as far as I know it is not done(in my area).

According to labor law:

Live-IN nannies do not have to be paid overtime.

Live-OUT nannies must be paid overtime.

We've had both live-in and live-out.

[mamasaurus]

Originally Posted by rivkah

I'd like to encourage you to comply with tax laws. Many people do not, but that doesn't make it right.

This is a good place to start:
http://www.irs.gov/businesses/small/...=97877,00.html

Agreed. Don't set yourself up to get into trouble.