Paying your Household Employee

paying your household employee Although the issue of compensation is generally between you and your household employee, the government sets certain minimum standards. The Federal Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record keeping, and child labor standards affecting some full-time and part-time workers in the private sector.

Domestic service workers such as full-time nannies, babysitters, housekeepers, chauffeurs, and cooks are covered by the FLSA if (1) their cash wages from one employer are at least $2,700* in a calendar year (or the amount designated pursuant to an adjustment provision in the Internal Revenue Code), or (2) they work a total of more than 8 hours a week for one or more employers.

Nonexempt Household Employees

Covered nonexempt workers are entitled to a minimum wage of not less than $7.25, effective July 24, 2009. Keep in mind that your state may require you to pay your household employee a minimum wage that is higher than the federal minimum wage. Overtime pay at a rate of not less than one and one-half times their regular rates of pay is required after 40 hours of work in a workweek. NannyPay automatically calculates overtime pay at this rate, although the software will permit you to set a higher multiplier, if desired. You should check with your state to see if it has other minimum wage requirements.

You should also be aware that wages required by the FLSA are due on the regular payday for the pay period covered. Deductions made from wages for such items as cash or merchandise shortages, employer-required uniforms, and tools of the trade, are not legal to the extent that they reduce the wages of employees below the minimum rate required by FLSA or reduce the amount of overtime pay due under FLSA.

FLSA Exceptions

The FLSA contains some exemptions from these basic standards. Some apply to specific types of businesses; others apply to specific kinds of work.

While the FLSA sets basic minimum wage and overtime pay standards and regulates the employment of minors, there are a number of employment practices which FLSA does not regulate. For example, FLSA does not regulate:

vacation, holiday, severance, or sick pay;
meal or rest periods, holidays off, or vacations;
premium pay for weekend or holiday work;
pay raises or fringe benefits; and
a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees.

Some employees are exempt from the overtime pay provisions or both the minimum wage and overtime pay provisions of the FLSA. Because exemptions are generally narrowly defined under the FLSA, an employer should carefully check the exact terms and conditions for each exemption. Detailed information is available from local Wage-Hour offices. Generally, nannies are not considered to be exempt employees under the FLSA.