Calling All Parents!

In honor of National Nanny Recognition Week (September 19th – 25th) The Help Company in conjunction with the National Association for Nanny Care will host Nannypalooza 2010! Sunday September 19th at the Santa Monica Public Library. We are inviting all of our fabulous nannies to join us for a summer picnic themed afternoon of fun, networking and professional development! The event will provide valuable professional and child development workshops, the chance for nannies to connect with their colleagues and not to mention a fun afternoon to show how much we appreciate them!

In preparation for the event, we would love to hear from you! If you have a good story or kind message to share about how you appreciate your nanny please send them to nannypalooza@thehelpcompany.com. We will share them with our blog community and other nannies at Nannypalooza 2010! Also, if you would like to sponsor your nanny’s attendance at Nannypalooza 2010! please visit our event page (see link below). The cost per nanny is $20 and seats are limited!

http://events.constantcontact.com/register/event?oeidk=a07e2yxxzuyf5fd5740

We look forward to showing our appreciation for nannies at Nannypalooza 2010! and hearing your wonderful stories!

Nannies sit well in fiction

By Felicia R. Lee

NEW YORK TIMES NEWS SERVICE

Keith Bedford | THE NEW YORK TIMES

Victoria Brown, an author who began working as a nanny at age 16 after arriving in New York from Trinidad

| THE NEW YORK TIMES

Marcy Dermansky, author of Bad Marie

Compensation Structure for Nanny Shares

A Complimentary Resource from © 2010 Breedlove & Associates, LLC

Breedlove & Associates

NannyShare arrangements are becoming increasingly popular – helping many families afford the quality leap from daycare center to professional nanny.  Even though NannyShares have some significant disadvantages versus hiring your own nanny, for many families the arrangement is attractive – even necessary – simply because of its tremendous cost-sharing advantage.

For those families – and the agencies who serve them – this edition of The Legal Review offers insights into the legal considerations of NannyShares.   In this case, one seemingly-minor compensation mistake left both families with a major unexpected expense.

The Mistake

Two families in Virginia connected through an online parenting forum and decided to enter a NannyShare for their two toddlers.  One family had already setup initial interviews with a few candidates and brought the other family onboard in the final round of interviews to help make the hiring decision.  When the hire was made, each family moved forward with establishing their own set of federal and state tax IDs, and created a spreadsheet that both families would use to track the employee’s earnings and tax deductions.  (The nanny had been paid through Breedlove & Associates in a previous job and recommended our service, but both families felt confident that they could handle the compliance process on their own).

All parties agreed to a 50-hour workweek at a compensation rate of $15 per hour.  To simplify the payroll calculations, the families simply split the hours in half so that each paid the nanny for 25 hours per week at the agreed upon rate of $15 per hour.

The Law

A NannyShare is considered to be one job (not two part-time jobs) – with compensation funded by two employers.  Therefore:

0.Overtime and other relevant wage & hour laws are applicable to the job as a whole.  In this case, since household employees are entitled to overtime for each hour over 40 in a 7-day workweek, the employee must be compensated at a rate of 1.5 times their regular rate of pay for all hours worked over 40 in a 7-day period.

0.This Virginia nanny was working 50-hour weeks at a rate of $15 per hour.  The 10 hours per week of overtime should have been paid at a rate of $22.50 per hour.  As a result, she was underpaid by $75 per week.

0.The families should have taken the total sum owed the nanny each week and then divided it according to their agreement (in this case, it’s an even 50-50 split but in many cases, one family may pay a slightly higher percentage due to hours, age of child, home usage, etc.).  Because they divided the hours rather than the total sum, they viewed the workweek as 25 hours and inadvertently overlooked the overtime laws.

The Mess

After two years, the NannyShare ended because both families were ready to place their children in pre-school.  The nanny soon found another full-time job through a placement agency in her area.  During the contract negotiation, the placement counselor informed the nanny of the overtime law since she would be working approximately 45 hours per week.  This was news to the nanny and she immediately contacted her former employers and requested they compensate her for unpaid overtime.  According to her calculations, she was owed $7,875 ($7.50/hour x 10 hours/week x 105 weeks).

The Outcome

Determined to sort out the situation, one of the families contacted Breedlove & Associates for help.  We analyzed their situation and reviewed the compensation agreement.  Unfortunately, we had to inform them of the “single-job” logic behind the law and how she was indeed watching each of their children for 50 hours per week.  As a result, she is entitled to time-and-a-half for the final 10 hours of every week.

The families felt terrible about underpaying the nanny, especially since they had prided themselves on being well-informed and well-prepared.  We helped them amend their prior quarter returns to include the overtime compensation and they issued payments to the employee.  Each family ended up paying the employee $4,100 (to make her whole and cover some interest).  In addition, they owed back taxes, penalties and interest totaling roughly $800 per family.

How the Whole Thing Could Have Been Avoided

Unfortunately, having good intentions and being well-prepared isn’t always enough to prevent legal problems in the complex and ever-changing world of payroll, tax and labor law.

Had the families used a reputable placement agency, the counselor would have steered them away from this mistake.  In fact, they would have shown them how to structure their employment agreement to legally include overtime within the originally agreed-upon compensation figure of $750 per week.  (This one piece of guidance would have saved each family significantly more than an agency placement fee).

Further, had the families heeded the employee’s recommendation and joined Breedlove & Associates – or at least called us for a free, no-obligation consultation – we would have been able to caution them on their compensation agreement and guide them to a risk-free solution.

Hiring a nanny – shared or not – is a tremendous blessing for families.  But it comes with some legal and financial complexities that can easily escalate into expensive, time-consuming problems.   In legal matters, the old axiom applies: an ounce of prevention is worth a pound of cure.  If your agency, your families or your nannies have any questions about household employment, please call us so we can ensure that everything gets set up correctly and nobody has any expensive surprises.  Our household employment experts are available Monday-Friday 8am-6pm, Central Time.  Just call 888-BREEDLOVE (888-273-3356).  We’re here to help.

$1,700: Social Security & Medicare reporting threshold

$1,000: Unemployment reporting threshold (some state thresholds are lower)

$2,500: Total tax breaks available for families who pay legally

This article by Breedlove discusses the issue of overtime and how families often forget to discuss and pay overtime for their nannies. The article explains how a nanny can sue for overtime after they are no longer employed by the family. As you will read it is always better to outline and discuss all the details upfront rather than deal with them later.

Overtime

The Law Applies, Even with a Salary

In the past three weeks, we’ve encountered more overtime disputes than we did in the previous three years.   As we analyzed each case, we realized they all had one thing in common: the families offered a salary.  There is, of course, nothing wrong with offering a salary – the law provides latitude for families to pay on either a salary or an hourly basis.

However, the term “salary” means different things to different people.  In each of our recent overtime cases, these different definitions led to miscommunication between agency and family about overtime pay requirements for salaried employees.

Given the costly nature of overtime mistakes and the fact that there is no statute of limitations for overtime disputes, it is extremely important for agencies, candidates and families to fully understand the law.  The good news: these expensive legal problems are easy to prevent with a little knowledge and discipline.

The Mistake

A family hired a nanny and offered to pay her a salary of $720 per week for a work-week that was expected to be 45 hours ($16/hour x 45 hours = $720).  The employee was happy with this compensation arrangement and agreed to the salary.  The nanny was paid at this rate for three and a half years.

On occasion, the employer asked the employee to work some “extra hours” for babysitting and overnight stays.  They agreed that these hours would be paid at the $16/hour rate.

The Law

According to the Fair Labor Standards Act, household employees are considered “non-exempt” workers – meaning they are protected by overtime law and must be paid at a rate that is 1.5 times the regular rate of pay for all hours worked over 40 in a week. (All includes “extra” duties such as overnight stays, babysitting on date night, etc.).  The law applies regardless of compensation structure (salary or hourly).

Conversely, most families that hire nannies are employed in occupations that are considered “exempt” – meaning their occupation is not protected by overtime law because it is considered to be “highly compensated” and not prone to worker abuse.  Exempt workers are typically paid the same salary regardless of how many hours they work.

This apparent double-standard creates the common misperception that nannies do not have to be paid overtime if they are paid a salary.  In fact, it’s the occupation – not the pay structure – that determines overtime requirements.

Therefore, the employment agreement in this case is illegal.  Since the nanny and family had agreed to a salary of $720 for 45 hours/week, the legal way to structure this arrangement would be to delineate the regular and overtime rates of pay within the agreement.  For instance:

“The compensation of $720/week is based on 40 hours at the regular rate of $15.16/hour and 5 hours at the overtime rate of $22.74/hour.  Any additional hours per week will be paid at the overtime rate of $22.74.”

IMPORTANT NOTE: In order to stand up in the court of law, this agreement MUST be in writing and MUST be signed by the employee.

The Mess

Two years after she left the family for another job, the nanny lost her job and began collecting unemployment.   During her unemployment, she read a nanny blog talking about overtime and realized her former employer had not paid her correctly.  Feeling squeezed for money, the nanny filed a wage dispute seeking payment of $7,880, based on 985 hours of overtime during her employment (the overtime rate should have been $24/hour; since they only paid $16/hour, she was underpaid by $8 for every hour of overtime – $8 x 985 = $7,880).The family defended the compensation by reminding the nanny that she had agreed to a flat salary of $720 per week and $16/hour for extra hours.  They even emailed a copy of the employment agreement showing the nanny that they had lived up to their end of the agreement.  In the email, the family made it clear that they were being generous to pay her anything for the occasional “extra hours” since they themselves worked extra hours at their jobs without any additional compensation.The nanny responded by saying that a lawyer told her the employment agreement was illegal, and therefore, she was entitled to the compensation.

The Outcome

After some research and legal counsel, the family realized the nanny was indeed entitled to the overtime pay.  They paid her $7,880.The family joined Breedlove & Associates to make sure that their new nanny was being paid properly.  They divulged that they had found their former nanny using an online agency.  Although they did not talk to anyone about overtime, the online agency had provided some information on several legal topics – including overtime – but they had dismissed it because “we offered a salary and so it didn’t seem relevant to us.”

How the Whole Thing Could Have Been Avoided

This case illustrates just one of the many nuances associated with the household employment industry and how easy it is for simple misperceptions to evolve into expensive, frustrating legal problems.

It also underscores the value and importance of personal guidance.  A diligent placement counselor would have walked the family through the overtime law – and other danger areas – to prevent this kind of mistake and ultimately save thousands of dollars.

To help you easily and efficiently provide this level of personal guidance through all the financial and legal aspects of employment, we are set up to be an extension of your agency.  Our team of tax and labor law experts is available free of charge for your clients, candidates and counselors.

We realize everyone is busy, but please encourage your families to call for a brief, customized “orientation.”  A few minutes on the phone is the fastest, easiest, safest way to prevent problems and ensure protection for all parties.

If you have any questions about overtime – or any other aspect of payroll, tax and labor law – please let us know.  We’re here to help.

Alan Bersin, commissioner of U.S. Customs and Border Protection, says he didn’t know he’s required by law to complete a form saying he verified that his household employees were eligible to work in the U.S.

Bersin said he collected Social Security cards, driver’s licenses and other documents from 10 household employees he has hired since 1993, to make sure they could work in the U.S.

But he did not fill out and keep a particular form, known as an I-9, which is signed by the employer and employee and details documents accepted to verify the employee’s legal status.

Members of the Senate Finance Committee said they are surprised by that, because Bersin was a U.S. attorney.

Obama named Bersin commissioner through 2011 during a congressional recess. He must be confirmed by the Senate to serve longer.

Alan Bersin, commissioner of U.S. Customs and Border Protection, says he didn’t know he’s required by law to complete a form saying he verified that his household employees were eligible to work in the U.S.

Bersin said he collected Social Security cards, driver’s licenses and other documents from 10 household employees he has hired since 1993, to make sure they could work in the U.S.

But he did not fill out and keep a particular form, known as an I-9, which is signed by the employer and employee and details documents accepted to verify the employee’s legal status.

Members of the Senate Finance Committee said they are surprised by that, because Bersin was a U.S. attorney.

Obama named Bersin commissioner through 2011 during a congressional recess. He must be confirmed by the Senate to serve longer.

http://www.latimes.com

A Nannies’ Bill of Rights
A New York bill protecting domestic workers that would be the first of its kind.
By Meaghan Winter

When Franklin Delano Roosevelt unveiled his plan for a federal minimum wage in May 1937, Southern planters grumbled that they’d be required to “pay your Negro girl 11 dollars a week.” Roosevelt knew his Fair Labor Standards Act would squeeze through Congress only with the approval of Southern Democrats, so he reassured the grumblers: “No law ever suggested intended a minimum wages and hours bill to apply to domestic help.” 

The president stuck to his word. The Fair Labor Standards Act and other New Deal labor reforms excluded domestic workers—mostly women—and also farm laborers—mostly Latinos and blacks. They were denied a minimum wage, overtime pay, collective bargaining rights, and other protections. Domestic workers eventually secured the right to a minimum wage, in 1974. But the law still doesn’t consider them “employees.” Nannies, housecleaners, and caregivers are still not legally entitled to the same protections guaranteed to other workers.

For May Day, how about a Domestic Workers’ Bill of Rights? For six years, Domestic Workers United, an organization of Caribbean, Latina, and African housekeepers and caregivers, has been lobbying in New York for such a bill, which would be the first of its kind in the country. The proposed legislation would guarantee New York’s 200,000 domestic workers sick days, overtime, a day of rest, protection under discrimination laws, and notice before termination. It would extend these protections to undocumented workers, just as the Fair Labor Standards Act does. Last spring, the bill won Gov. David Paterson’s endorsement—and then Albany ground to a halt. This May, the bill will finally hit the State Senate’s floor. 

Back in the 1930s, domestic workers’ pay fell to about 15 cents an hour, or $2.30 in today’s currency. Because FDR left them out of his reforms, domestic workers’ wages didn’t rise along with other pay rates. Through the 1940s, black women who’d traveled from the South waited at “slave markets” for white women looking to hire a domestic day laborer. New York had at least 20 of these markets. Far from their families, often without proper winter clothes, these migrants had no way to ensure that their employers would actually pay them at the end of the day.

Today, immigrants and other women of color still do a disproportionate share of paid domestic work for uncertain wages, little respect, and no security. Employers still tend to see their nannies and housekeepers as “help,” often refusing to hire on the books and insisting on paying in cash to avoid Social Security taxes. According to a 2008 survey of parents in Park Slope, Brooklyn, only 16 percent of employers filed Social Security taxes for their nannies, leaving them without Social Security, Medicare, and pensions. Housecleaners and caregivers simply remain far more at the mercy of their employers’ decency than other workers.

And decency only goes so far. One of Domestic Workers United’s members, Marina, was hired to care for a 13-year-old boy who was handicapped and wore diapers. Her boss paid her $2 an hour and told her to sleep in a basement where sewage overflowed. Marina cobbled together a cardboard walkway so she could pass between her bed and the door without trampling through feces. Her boss fired her without telling her why and made Marina leave the house the next day. As a Colombian immigrant with no family in the States, she had nowhere to go. 

With the help of Domestic Workers United and the National Employment Law Center, Marina sued her former employers, and after a four-year legal battle finally won back pay. Her story is especially bad, but all domestic workers can be fired without warning or reason. Live-in workers are often on-call day and night: According to Domestic Workers United, 45 percent of New York City’s live-in caregivers work for 60 or more hours a week. Their pay tends to be meager, usually below the minimum wage. The same survey reports that in New York City, an overwhelming majority of domestic workers are immigrants and 76 percent are not citizens. When live-in workers do have documentation, their employers may have secured the visas. Employers have been known to take passports and stop immigrant workers from leaving the house. 

Let’s assume that most people aren’t going to put anybody in a feces-covered basement or take an employee’s passport. Hey, let’s assume that most employers are honest and kind. Even then, when a housekeeper or nanny negotiates with her boss, she does it alone. She doesn’t have co-workers, the law, a union, or any sort of prestige to lean on. Negotiations between a domestic worker and employer are based on personal expectations, not codes. 

I worked as a nanny in my early 20s. Sometimes my boss and I sprawled across her apartment’s hallway, absorbed in conversation and all but ignoring her 3-year-old daughter. My boss confided that she was ambivalent about motherhood. She felt guilty every morning she left her daughter to go to work, but she felt claustrophobic and resentful when she didn’t go. I listened to win her approval, which always felt just beyond my grasp. And I put up with an ever-fluctuating schedule. My boss would call last minute to rearrange my hours, and if I didn’t work, I didn’t get paid. 

I knew I should tell her that I needed a set salary and schedule, but I felt disposable and was afraid of confrontation. Despite myself, I liked this mother and knew she was struggling. Were my grievances unreasonable? I didn’t know. I wasn’t living hand-to-mouth or sending money to my family in Guatemala. I was a citizen, white and college-educated. And even so, because my only “contract” was a vague conversation during my interview—when I was my most agreeable, of course—I found it hard to stick up for myself.

It’s no mystery why immigrant nannies, housekeepers, and caregivers have trouble demanding fair working conditions. The Domestic Workers’ Bill of Rights would give them legitimacy and a code to rely on. And it would give guidance to employers who want to treat their employees fairly, but aren’t always sure how. Come on, New York, let’s leave the 1930s behind.

Like DoubleX on Facebook. Follow us on Twitter.

Meaghan Winter is working toward an M.F.A. at Columbia, where she also teaches writing. She’s at work on a book about the human hair trade.
       

Copyright 2007 Washingtonpost.Newsweek Interactive Co. LLC

Summer Nanny Slip-Up
by
BREEDLOVE AND ASSOCIATES

As the school year begins to wind down, many families begin thinking about a summer nanny.  Since these positions generally last for only a few months, some families choose to ignore their household employer payroll and tax obligations – out of a fear of costs or paperwork or both.  This case illustrates that these fears are unfounded – especially for families with short-term or part-time nannies. 
 
The Mistake
 
A family hired a part-time nanny to care for their children during the summer.  They agreed to pay the nanny $15 per hour.  By the end of the summer, it had amounted to 300 hours or $4,500.  Due to the temporary nature of the position, the family decided it would be easier to “just pay the nanny in cash.”  A misconception about cost also played a role in the decision, as the husband had assumed “that the employer taxes would make the summer nanny prohibitively expensive.”
 
The Law
 
Household employers who pay an employee more than $1,700 (2010) in a calendar year are required to withhold Social Security and Medicare taxes from the employee’s wages.  They also have an obligation to match the Social Security and Medicare withheld, and pay federal and state unemployment taxes.  It is the employer’s responsibility to see that all taxes are remitted to the appropriate tax agencies.  These requirements must be met, even for short-term and part-time arrangements.
Families who pay legally have two tax break options available:
Dependent Care Account (also known as “Flexible Spending Account” or “FSA”): Many employers allow employees to set aside up to $5,000 of pre-tax earnings for childcare expenses.  Enrolling for this benefit can save families up to $2,300, depending on their tax bracket.
Child or Dependent Care Tax Credit: Families can take advantage of a 20% credit on expenses of up to $3,000 for one dependent, or up to $6,000 for two or more dependents.
These tax breaks offset most of the tax cost for those hiring full-time nannies.  For those hiring short-term or part-time nannies, the tax breaks usually outweigh the tax costs by a significant margin.  Here’s a look at the math for our summer nanny situation if they had paid correctly:

Employee’s Gross Wages                           $4,500
Employer’s Tax Obligation                             $506
Total Cost before Tax Breaks                                     $5,006
Savings from FSA                                                   <$2,200>
Total Cost after Tax Breaks                                       $2,806  
As you can see, in this example, when the family pays in cash, their cost is $4,500.  On the other hand, if the family pays legally and capitalizes on the childcare tax breaks, the cost drops down to $2,800 – a savings of $1,700!  Plus, there’s the added perks of 1) no legal risk, and 2) the nanny gets all the benefits and protections of professional pay (i.e. Social Security, Medicare, unemployment, disability, ability to obtain credit, etc.).
 
The Mess
At the end of the calendar year, the family requested reimbursement from their Dependent Care Account for the $4,500 in wages paid to their summer nanny.  The HR department informed the family that FSA reimbursement required formal paperwork (i.e. paystubs) to demonstrate a qualified childcare expense.
 
Anxious to sort out their situation prior to the end of the tax year (FSAs have a “use-it-or-lose-it” stipulation), the family contacted Breedlove & Associates for help. We set them up, filed their overdue reports with the state, prepared all necessary year-end documents and then terminated their service with us (we don’t require a long-term commitment so families can cost-effectively use our service for any length of time).
 
Since no taxes were withheld from the employee’s wages, the family had to either cover her share of Social Security and Medicare taxes or go back and collect those taxes from their summer nanny. They opted to pay it themselves.
 
The Outcome
By playing catch up at the end of the year, the family was able to utilize their FSA allocation under the deadline and they were able to minimize their penalties and interest.  However, they paid a price for their procrastination.  Their actual budget ended up as follows:
 
Employee’s Gross Wages        $4,873 ($4,500 + Employee’s Social Security and Medicare)
Employer’s Tax Obligation          $543
Penalties & Interest                     $260
Total Cost before Tax Breaks                      $5,676
Savings from FSA                                     <$2,200>
Total Cost after Tax Breaks                        $3,476
Cost If Handled Correctly                            $2,806
Loss Due to Procrastination                                         $670
As you can see, although the family still saved more than $1,000 by paying legally, they threw away another $670 in savings simply because they waited until the end of the year to fulfill their obligations.
 
How the Whole Thing Could Have Been Avoided
 
Had the family visited the Employer Budget Calculator on our website or called us, they would have immediately realized that their cost and complexity fears were based on misconceptions rather than reality.  Tax breaks more than covered the employer tax costs – especially in a short-term employment situation like this.  And a service like ours can handle all the paperwork for a small, tax-deductible fee and no long-term commitment.
 
If your families want more information about tax breaks for summer nannies, they can visit our website or call us for a complimentary, no-obligation, no-pressure consultation. In about 10 minutes, we can assess their individual situation, explain the law, guide them past all the labor law landmines, help them capitalize on their tax breaks and address any questions or concerns they may have. Whether they join our service or not, they’ll be armed with all the budgetary and legal knowledge they need to make informed decisions.