Understanding wage and household labor laws well worth the time and effort

By Guy Maddalone

There is much more involved with wages and hours for household employees than setting a work schedule and negotiating wages – there’s also the law. In fact, there are many laws, creating a lot of uncertainty within households that employ help. There is much to know and manage when it comes to wages and hours, and not understanding what the requirements are can lead to serious problems. It is critical that employers are aware of their legal requirements on federal, state and local levels in order to lawfully hire and employ a household employee.

The U.S. Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record keeping, and child labor laws affecting full- and part-time workers. Domestic service workers – such as nannies and housekeepers – are covered if their cash wages from one employer are at least $1,000 per calendar year, or if they work a total of more than eight hours a week for one or more employers.

The FLSA requires employers to pay at least the minimum wage set by the federal government (presently $5.15 per hour), and overtime pay of one and one-half times the employee’s regular pay rate for work over 40 hours per week. Live-in domestic workers are exempt from overtime pay under the FLSA, but household employers with live-out staff must comply. Other items the FLSA does not require but some local laws might include are vacation, holiday, severance or sick pay, pay raises or fringe benefits, and discharge notices. Employers need to ensure that they comply with the laws set in their locality. According to Department of Labor record keeping regulations, employers are also required to keep records on wages and hours. For more detailed information on the FLSA, go to www.dol.gov.

Just as positions and workplaces differ, so do salaries in the household employment industry. No standard salaries exist other than federal minimum wage requirements. Wendy Sachs, president of The Philadelphia Nanny Network in Ardmore PA , said she believes that a nanny’s salary and compensation package should reflect her or his background and experience.

“The more experienced, educated nanny is typically paid in the higher salary range,” she said. “As in any industry, an individual who brings more to the job by way of a broader and deeper experience will be compensated accordingly.”

The Family Medical Leave Act (FMLA) in general requires employers of 50 or more people to provide up to 12 weeks of unpaid, job-protected leave to eligible employees for the birth or adoption of a child, or for the serious illness of a child or parent. Although FMLA does not apply to most household employers, a variation of family medical leave is something for employers to consider offering to their household help. Likewise, implementing a sick and personal day policy benefits all, and a well-documented policy safeguards against most eventualities. Time-off payments for sick, personal or vacation days should be agreed upon by the employer and employee prior to hiring, and written in the household employment work agreement and employment handbook.

It is also important that the employee’s compensation be detailed fully – including vacation, mileage reimbursement, paid auto insurance, and more – before an employer hires an employee.

When it comes to any payment to employees, it should always be made by check so that both parties have a record. Every employer is responsible for the timely payment or deposit of several federal, state and local taxes. For more information on employment taxes, refer to the book How To Hire & Retain Your Household Help by Guy Maddalone.

Besides the obvious benefit of paying an employee correctly – remember, it’s the law – there are other incentives for both the employer and the employee. The employer has peace of mind knowing that they are practicing good human resources and are legally operating a business. The employee has a legal employment history to refer to when applying for future jobs, mortgages or loans, and is also covered by Social Security, Medicare, unemployment and workers’ compensation insurances (if applicable) benefits via payroll taxes.

Figuring out a household employee’s taxes and payroll can be complicated and time-consuming. But understanding the requirements under the law is well worth the time and effort, in order that things are done legally and as efficiently as possible.

Planning and Scheduling Wages and Hours Checklist:

• Abide by all laws – local, state and federal.
• Check your state’s minimum wage laws as some state and local minimum wage laws supersede the present federal minimum wage of $5.15 per hour (2005).
• Clearly communicate during pre-employment discussions whether wages are gross or net.
• Clearly identify whether the employer or employee will pay income tax from wages.

To read in more detail about this topic, plus much more, order your copy of How to Hire a Nanny, by Guy Maddalone, the nation’s household help expert, online at http://www.gtm.com/gtm_household/how_to_hire_a_nanny.html or by calling 888-432-7972.

Copyright 2009 GTM Household Employment Experts. All rights reserved.