Nanny Pay: Guaranteed Hours Vs. Salary

A photo by Leo Rivas-Micoud. unsplash.com/photos/R_BLOGXpsOg
A photo by Leo Rivas-Micoud. unsplash.com/photos/R_BLOGXpsOg

These are the two most confused terms in the nanny profession. I frequently encounter people using these terms interchangeably when they're not interchangeable. While similar, guaranteed hours and salary are not the same thing. Let me repeat, they.are.not.the.same.thing. Let's break it down:

Guaranteed hours are exactly that -- hours that are guaranteed to a nanny so they can rely on a consistent paycheck. Say a nanny is hired for 40 hours/week, but sometimes the parents have off from work and don't have their nanny come in. Or sometimes the family travels and chooses not to take their nanny, so their nanny is off work during that time. With guaranteed hours, the nanny in this example would be paid their full 40 hours regardless of if they worked them or not. If the nanny only worked 30 hours, per the parents' request, the nanny would still be paid for 40. If the nanny worked 0 hours because the family went out of town for a week, the nanny would still be paid their 40 guaranteed hours. Why is this the industry standard and so important to offer to your nanny? Because it's fair and it makes sense. Remember, when employing a nanny, you are agreeing to provide someone with a living wage. A living wage not only means the pay must be fair, but it also means the pay must be consistent. It's simply not fair to expect your nanny to lose pay when they are willing and able to work, but you are forcing them not to. How would you feel if your boss told you not to come in for a week and that you wouldn't be paid? Just like you, nannies rely on consistent income to pay their bills -- even one day of lost wages can significantly impact a nanny's financial situation.

If you are employing a nanny, even part-time, you should be offering guaranteed hours. It is the industry standard for ALL nannies (even new ones) to receive guaranteed hours. If you refuse to offer them or can't offer them, you should look into other forms of childcare because most nannies, especially experienced nannies, will not accept a position without guaranteed hours. Your nanny is blocking off that time for you each week and if for some reason you don't need your nanny to come in, that's your choice, not theirs. In fact, most daycares charge parents when kids miss days, so this is not an unheard of practice in the childcare industry. You might think it's easy for a nanny to just pick up extra hours elsewhere while you are on your week long vacation, but it's not. The stars really have to align for something like that to happen. Think about it -- the only way this works out is if by some chance your nanny gets connected with another family who happens to need coverage for that same exact week because their nanny is taking time off or something. Plus, talk about stressful. Can you imagine scrambling to find additional work because your boss told you that you were forced to take unpaid time off?

Guaranteed hours is one of those annoying things for parents that seems like such a waste of money. I get it. It's hard to stomach paying someone when they aren't working. But, you have to put yourself in your nanny's shoes and imagine what it would feel like to not receive consistent income even though you've indefinitely blocked that time off for your job. In the big picture, it's a small price to pay to help ensure longevity with your nanny. I often see nannies leave positions because several times per year the family forces them to take time off unpaid. The nannies quit because they can't rely on a consistent paycheck and therefore, can't support themselves.

I also want to point out that lots of nannies seem to think guaranteed hours means if a family doesn't need them, they are off work and free to do whatever. While oftentimes this is the case, nannies should not assume this. Guaranteed hours is an exchange -- a nanny is guaranteeing availability and the parent is guaranteeing pay for that availability. This means, the nanny must be available and willing to work all contracted hours, even if the family is going on vacation and won't be in town. Unless the family specifically tells a nanny they are completely relieved of their duties, a nanny should be in town ready and able to work, should the family need help with anything while they are away. Examples of this might be when a family needs a nanny to dogsit/housesit or organize the kids' playroom, organize the kids' closets, go grocery shopping to ensure the house is stocked for when they return from vacation, etc. These options are great for parents who want to offer guaranteed hours, but have struggle with the idea of paying someone to do "nothing".

You might ask, how is offering guaranteed hours different from paying your nanny salary? If a nanny has guaranteed hours, this means they will always make the same amount per week no matter how much they work, hence, a salary. Wrong. While on the surface it seems like your nanny is getting paid a salary, they're not. I can say this with absolute certainty because nannies cannot be paid a true salary. By definition, a salary is a fixed compensation periodically paid to a person for regular work or services. This means, if a person works less hours or more hours in a week, their paycheck is still the same fixed compensation. Nannies cannot be paid this way. I mean, technically they can as there are loopholes with everything and lots of people break the law, but they should not be paid this way because nannies are non-exempt hourly employees per the FLSA. This means nannies must be paid hourly, and if they work more than their guaranteed hours, they must be compensated for them with applicable overtime. I often see families advertise a nanny position as salary because some weeks the nanny will work less while other weeks the nanny will work a lot, so it all evens out. THIS IS CALLED BANKING HOURS AND IS ILLEGAL. I will touch on this more in a separate article, but please know that banking hours is illegal and no nanny should ever accept a position with this set up. Nannies must be paid hourly for every hour they work, including applicable overtime. Period.

So while you can quote a "salary" to your nanny, you need to break it down hourly and consider overtime. I once worked for a family who quoted me a yearly "salary" based off 50 hours/week and they told me what the hourly rate came out to -- which was consistent with the going rate in my area. What they (and I) didn't account for was overtime -- they simply divided the weekly "salary" by 50 hours and that was it. They gave me a false hourly quote and purposely misled me (Yes, purposely. I know this because once I learned the law and made them aware of how they weren't honest about the actual hourly rate, they dismissed me and refused to pay me overtime). When I broke down the salary including overtime for the additional 10 hours (remember, anything over 40 hours must be paid at an overtime rate of 1.5 times the normal hourly rate), the hourly rate was actually significantly lower than what they quoted me and not at all the going rate for the area. Shame on me for not knowing my rights as a nanny and accepting the position in the first place, but also shame on them for doing this to the people raising their children. To this day, they are misleading nannies who aren't aware of salary and overtime laws by advertising a higher hourly rate than they are actually paying.

I bring up this specific example because while not all families who pay salary are trying to take advantage of their nanny, some are. I think it's important for nannies to be aware of this exact loophole since it's tricky and easy to fall for. I want to emphasize to nannies that guaranteed hours and salary are not the same thing and if a family ever offers you a salary (whether it be weekly, yearly, etc.) you need to break it down, factoring in applicable overtime, and make sure the base hourly rate is something you are actually okay with. In fact, the breakdown of the "salary" needs to be written into the contract. Parents will often default to boasting about the "high" annual salary they are offering when confronted about the low hourly rate it breaks down to. Parents will say, "Ya, but we pay X per year. None of our friends pay that much and think we are crazy for paying our nanny such a high salary!" Hmm...so because you need your nanny to work 50+ hours/week, your nanny should receive a subpar hourly rate? Nannies, your time per hour isn't worth less simply because a family needs you to work a lot of hours! If a family needs a ton of hours and you really like them, it can be worth it to drop down your rate a little, but I have to point out that other professions, such as lawyers, do not lower their hourly rate when a case demands a lot of hours. This is exactly why nannies are non-exempt hourly employees -- so that parents cannot overwork us for little pay.

Parents might be thinking that this isn't fair and nannies need to choose -- they can't have their cake and eat it too (aka, guaranteed hours + not salaried). While I hear what you're saying and it makes sense for any other job, it doesn't make sense for nannying. At other jobs, the employees have the opportunity to work their full hours...businesses don't simply close up shop and tell the employee that they will be off work, unpaid for an entire week. Working as a nanny is unlike any other job out there, hence, different rules apply.

I hope this article resonates loudly with nannies and encourages them to stand up for themselves and the rights they are entitled to. I also hope parents reading this take away the importance of offering guaranteed hours, not paying salary, and being honest about the hourly rate they are offering. Just like I didn't know the salary and overtime laws when I accepted that position, many nannies and parents don't as well. But as Maya Angelou said, "When you know better, do better". Nannies and parents who have read this...you now know better. So DO better.