What are standard raises and procedures for live out nannies?
April 12, 2013 6:51 AM   Subscribe

My girlfriend nannies for three girls and has concerns about tax season, raises, bonuses and general treatment.

My girlfriend is 28 years old and has been with her current family for 3.5 years. (Sept '09) She gets paid $650 a week (about $16/hour) from the start with no raises each year. She receives a small bonus yearly, which basically is a paid week off of Christmas. (So an extra $650 a year, which is like a maybe 1.5-2% bonus)

-She's never received a raise in the time she's worked for the family, not even a Cost of Living raise
-During tax season they tend to wait until the very last minute, which causes her a lot of undue stress and she worries about being audited.
-She tends to work 50-54 hours a week, which falls under overtime for the Fair Labor Standards act. That states she should get time and a half for anything over 40 hours at the minimum wage rate. (It can be hourly or a lump payment of the 10 hours time and a half from what I've read, but in NJ you MUST get time and a half for OT past 40 hours)
-She gets paid half cash and half check, (which means they're trying to skirt tax law by only claiming half of the payment as traceable) And according to her in 2012 they only gave her one check...the rest was cash.


1. Should she receive a yearly cost of living raise at the least? (We live in an expensive state, and the bonus she gets is a one time thing, and not a raise) COLA for 2013 is 1.8%, which would factor to about $548 a year. Bonuses are then at the discretion of the employer.
2. She often works much overtime without any extra compensation. The hours are erratic as they tell her they'll be home at a certain time etc, and then may keep her for 2-3 hours past that. It would probably be fine if she were compensated. It's state law in NJ for her to get time and a half past 40 hours even if it's based on minumum wage.
3. What's the procedure during tax season? They're basically paying her under the table, and they really need to be filling a W-2 For her. Seems like they're trying to claim less on their taxes.

Any advice or input would be really helpful.
posted by PetiePal to Work & Money (20 answers total) 6 users marked this as a favorite
I think you're conflating some totally different issues: 1) what is standard practice and 2) what is legal 3) what is fair.

It's very common for nannies to be paid under the table. That's not legal, but it's how it usually works. It's also (unfortunately) very common for nannies to be underpaid. Your girlfriend definitely should be paid a fair wage, and get raises, but it's not unusual that she doesn't.
posted by insectosaurus at 7:10 AM on April 12, 2013 [3 favorites]

Has she talked to the family about this? Is your girlfriend motivated enough to actually bring this up with the family? Or is it just you looking at the situation from the outside, being dissatisfied with the state of things?

First things first, I think it's important that it's actually your girlfriend with these questions, looking for more info so she can present a good case to the family when she brings it up with them. There's nothing that you, personally, can do about it.

If your girlfriend has already spoken with the family and they are unwilling to bend, she needs to leave. If this is something she's going to be doing as Her Job, she should get herself hooked up with a legit nanny service where they'll take care of all the negotiation for her.

(I had a roommate a while back who nannied through a nanny service, and she got hooked up with a really baller family (people whose names you'd recognize from being on parks and the sides of buildings) and even got health insurance.)
posted by phunniemee at 7:16 AM on April 12, 2013 [2 favorites]

1. That is ENTIRELY up to the discretion of the employer, just like every other job. No one in any job (unless you have an employment contract or union contract that guarantees them) is actually entitled to a raise at any time. If she wants a raise she should speak to them about it but like in any salary negotiations she needs to know what she is going to do if they say no.

2. Nannies are usually exempt from OT rules provided they make at least minimum wage for the hours they do work. At $650 a week, minimum wage would hit around something like 90 hours so as long as she isn't working more than 90 hours a week she is likely within the law for no OT.

3. Well they SHOULD either issue a w2 if they are paying her as an employee (which means they owe the employer taxes and would likely utilize a payroll provider to make things easier - but more expensive for them). If they aren't paying her as an employee then she SHOULD be getting a 1099 from them and she is responsible for all employment taxes. She doesn't actually need this to file her taxes though all she needs to know is the total of what she was paid during the year. Both 1099s and w2s are due by 1/31 of the year following.

Paying nannies under the table is quite common (not legal though). But usually that means the person receiving the money isn't choosing to pay taxes on it and the person paying the money isn't reporting it either. They can pay her in cash and she can still keep her own records and file her taxes accordingly though. I would definitely speak to them about either paying her as an employee or issuing her a 1099 if she is really worried about it though (but I have a low threshold for risk and don't work unless there is documentation).
posted by magnetsphere at 7:17 AM on April 12, 2013 [1 favorite]

I'm not sure how all this works in terms of legality, but there is a LOT going on here and I only see two options:
1. Bring it up with the family and attempt to negotiate more fair (and legal) terms of employment
2. Find another job.

Call me what you want, but #2 seems like a much easier option with higher chance of the type of changes you're asking for. An employer who hasn't given any sort of raise in 3.5 years (which, yes, isn't required but seems like a pretty basic gesture) is possibly not going to respond well to #1.

phunniemee's suggestion of her getting hooked up with an offical nanny service sounds pretty wise.
posted by PuppetMcSockerson at 7:20 AM on April 12, 2013 [1 favorite]

1. Cost of living raise (or any other raises she feels are merited) are up to her to negotiate. There's no federal law requiring employers to grant these. That said, there is absolutely no reason for her not to ask for a raise! $650 a week for 50+ hours work is not a lot.

Bonuses are also not mandated by law. In a sense, when asked about cost of living, they might come back with "what about that fat bonus you get every year?" Which would be sucky of them, but not illegal or anything.

2. Overtime as a freelance/"self-employed" employee is a tricky thing. Assuming they're paying her as a freelancer, I'm not sure the laws about overtime hold.

She should absolutely be tracking her REAL hours worked and considering whether what she's being paid covers that to her satisfaction. If she's regularly working above and beyond what is expected, they ought to pay her more. But I'm not sure they're actually required to by law. In any event, getting this from them is a negotiation on her part, since I doubt reporting them to the department of labor or filing a formal complaint is going to get the results she wants.

3. This depends entirely on how she's being paid. If she's being paid cash, uhhhhh, yeah, she still has to pay taxes on that. If she's getting a 1099 from them every year reflecting all or part of the money she's making, yup, gotta pay the taxes.

If she's not getting any documentation from them, that is really the only one of these situations where she has the leverage to tell them that what's happening is illegal and they NEED to submit a 1099 for her or BAD THINGS FOR EVERYONE.

I guess she could lobby for them to withhold on her behalf and send her a W2 each year, but if she can't even ask for overtime or a cost of living raise, the likelihood that she's going to get a W2 out of them is laughable.
posted by Sara C. at 7:24 AM on April 12, 2013

Your girlfriend is being treated badly. This may be common for domestic help, but that doesn't make it right or necessary. If she's a good nanny and she lives in a major US city she could do better.

1. She should be getting paid above the table. The family should be withholding taxes and paying into social security for her. It sounds like they aren't doing this. The long term result is that when your girlfriend is older, she will get reduced social security benefits because she will not have paid into the system.

2. She could be getting paid time off, i.e. sick days, holidays, and vacation. Getting a paid week at Christmas doesn't count as a "bonus". It's one week of paid vacation.

3. In many cases working full time she'd also be getting health insurance, or at least help with paying for health insurance.

That said, she is not entitled to an annual raise, and she is not subject to the same overtime laws that other workers are. (I don't know the details on overtime. It may kick in at 50 hours or it may not kick in at all. But it certainly doesn't start at 40 hours for domestic help.)

From what you've described I don't think the situation with this family is salvageable. It's sounds like they've decided to go under the table and take advantage of their nanny, rather than treating their nanny as a legitimate employee who actually needs to earn a living wage and make a life for herself. She might do better just looking for a new gig, and being clear up front that she wants to be paid above board and treated fairly. On the other hand, if this family really loves her and loves how she treats their kids maybe she could bring them around. But for that to happen she needs to have a good sense of what she deserves. It doesn't sound like she has that.
posted by alms at 7:31 AM on April 12, 2013 [10 favorites]

An employment lawyer really isn't much money for a one hour consultation. She should book an appointment and get her questions answered properly (and the lawyer may be aware of other issues she may not have even thought of).
posted by saucysault at 7:34 AM on April 12, 2013

She will not get what she doesn't ask for and so she needs to be prepared to negotiate.

It sounds like what she wants legal wages and withholdings, a guaranteed annual COL increase, two weeks of paid vacation each year, and an agreement on additional paid hours over 40 or 50 each week. She needs to ask for those things, understanding that she will never get more than she asks for.
posted by DarlingBri at 7:44 AM on April 12, 2013 [1 favorite]

Nannying in a lot of places is 1) a gray-market occupation and 2) entirely driven by local custom in terms of wages and compensation.

When my kid was born 2 years ago, we looked into getting a nanny and it was actually very difficult to find anyone who WANTED to be paid on the books. We considered going through a nanny service, but they're quite expensive in our area. We ultimately went with an actual daycare, but if we had done the nanny thing we would have had to get a payroll service, etc. It's more hassle than many families want to go through for something that actually limits the pool of applicants.

Overtime for nannies is also a very individual thing--some families pay a weekly wage that includes some amount of time flexiblity, some people pay hourly overtime, some people (like your girlfriend's employers) basically try to take advantage of the nanny's good nature and fondness for the kids.

Have they filed W-2s for her in the past? Are they paying FICA taxes for her? If not, she's working under the table (and not getting credit for Social Security, etc.) That doesn't mean she can't keep track of her own income and pay her taxes based on reported income, but it does mean she's not getting the benefit of what social safety net the US has.

However, I think it's really up to her to change that. She could try to renegotiate her current arrangement--the family presumably has an incentive to try to keep her-- or she could quit and either find a new job with a better up-front arrangement, or she could go through a nanny service, which will do some of that work for her.
posted by The Elusive Architeuthis at 7:48 AM on April 12, 2013 [1 favorite]

The Park Slope Nanny Survey snickerdoodle linked to looks like an amazing resource for your GF even though she isn't in NYC. It will give her a really good idea of what the norm is.
posted by DarlingBri at 8:55 AM on April 12, 2013

Does she have a contract? If not, it may be too late to address some of these issues. In the future, she needs a contract outlining all this before she starts work.

New Jersey does have domestic labor laws, but again, those are super hard to enforce and will, no doubt, create friction in her job and her life.

To answer in order:
1. No, she is not required to get a raise. She needs to have that discussion with the family if she feels it is warranted. Unless it is contracted, it's not required.
2. If she had a contract, she could negotiate for set hours/overtime. Without one, I'm not sure how you go about getting overtime. Again, she needs a contract and/or a conversation with her employers.
3. I'm not sure what the concern is vis-a-vis the taxes. Is she worried about not reporting income? It's very unlikely that the IRS will bother with her -- I was paid under the table for 10+ years as a nanny. The bigger fish would be her employers. Most employers won't claim a domestic because they have to pay health insurance, taxes, and comply with federal laws (see how that all ties in, now?). Unless she has contracted with them to pay her above board and file a W-2 then, again, she's kind of SOL. I worked for the DA of a major city and his wife was a tax attorney. Despite their total knowledge of the law and their potential outing in political settings, they still paid me under the table, citing that making me an employee wasn't "worth it."

I would advise that she schedule a time to sit down with them and discuss these issues. Getting angry and upset about issues that were never discussed or contracted for isn't a useful emotion. She needs to clarify anything that bothers her and get a contract on record ASAP.
posted by mrfuga0 at 9:09 AM on April 12, 2013

Tons of bad advice here. No way she's legally a freelancer, contractor, or 1099 employee.
posted by the young rope-rider at 9:31 AM on April 12, 2013 [1 favorite]

No way she's legally a freelancer, contractor, or 1099 employee.

Well, sure, but the likelihood that she's going to get her employer to treat her as a legit full time on-the-books employee, including withholding taxes and unemployment insurance and the whole nine yards is basically zero, and would be even if she found a new gig. This stuff comes with the territory when you're domestic help, and I say that as someone whose job description could potentially be filed under domestic help.
posted by Sara C. at 10:09 AM on April 12, 2013

I nannied for years. Everything you describe is standard practice, except for the lack of raise.

Why is it taking her 3.5 yrs to address these issues if they bother her? Really this family isn't going to do anything differently and having a nanny puts families in weird tax situations. Hate to say it, but if she's not content being paid under the table, she needs to find a different family to work for because it will cost this family *literally thousands* of dollars to change their taxes to reflect a nanny at this point.

I worked on the books and the understanding was that doing so meant no bonuses as the families had to pay about $2k in taxes to make it happen. They were willing to do so for me because I was ok working for less (I needed to purchase my own health insurance which meant tax forms) and they valued my experience. No way would it have worked to change course years down the line, they would have just found someone who DID want to be paid under the table.
posted by sonika at 2:15 PM on April 12, 2013

Oh yeah, she's absolutely not legally a freelancer and can't file as "self-employed" unless she works in her own home. I went through all that when trying to find the most equitable tax solution with my employers. A nanny is an employee of the family (or agency), end of story. She can absolutely not file as a contractor. The IRS is on to families trying not to pay taxes for domestic help.
posted by sonika at 2:17 PM on April 12, 2013 [2 favorites]

2. She could be getting paid time off, i.e. sick days, holidays, and vacation. Getting a paid week at Christmas doesn't count as a "bonus". It's one week of paid vacation.

(Sorry for multiple responses, I'm reading the thread in chunks while minding my own toddler.)

I got paid federal holidays and one week vacation. That was it. Sick days were only for if I was dead. The problem with nannying is that if you take time off, the family is without childcare. I don't know of a single nanny who works fewer than 50hrs/wk (because if the parents work 40, the nanny has to be there from the time they leave until the time they get home, usually an extra hour per day so 50hrs/wk) and none who get sick days or more than a week's vacation.

Full time nannying is a great job, but it does not come with the sort of perks that office workers are used to getting.
posted by sonika at 2:23 PM on April 12, 2013 [1 favorite]

Well, sure, but the likelihood that she's going to get her employer to treat her as a legit full time on-the-books employee, including withholding taxes and unemployment insurance and the whole nine yards is basically zero, and would be even if she found a new gig. This stuff comes with the territory when you're domestic help, and I say that as someone whose job description could potentially be filed under domestic help.

Reporting her to the IRS as a 1099 contractor would be illegal, alert the IRS that she's working there, and in no way benefit her employers. The IRS is very serious about this when it comes to nannies.

I am a nanny and have been for years. This is not a grey area.
posted by the young rope-rider at 3:42 PM on April 12, 2013 [1 favorite]

Well, sure, but the likelihood that she's going to get her employer to treat her as a legit full time on-the-books employee, including withholding taxes and unemployment insurance and the whole nine yards is basically zero, and would be even if she found a new gig. This stuff comes with the territory when you're domestic help, and I say that as someone whose job description could potentially be filed under domestic help.

This is also not true. I worked on the books for years - different families in different cities even. Yes, it's harder to find. No, it's not "basically zero." My previous boss was in the process of starting a business and had to absolutely be clean to the IRS so I would have been on the books for her even if I hadn't asked.

It's more difficult to find families to pay on the books, but absolutely not impossible at all and going through an agency can help a ton in that regard.
posted by sonika at 4:29 PM on April 12, 2013

We pay our nanny on the books and know many other families who pay their nannies on the books. Sara C may not have had that experience, but that doesn't mean it doesn't happen. There are lots of people in the US who want to stay legit and who understand the importance of giving proper benefits and time off.
posted by alms at 4:50 PM on April 12, 2013 [1 favorite]

We share a nanny with another family. Both families pay her on the books. She gets two weeks of vacation, five sick days, and she is paid hourly, so extra hours means extra pay. We've raised the hourly rate periodically, generally to reflect the addition of a new baby to the mix, but haven't given annual COLA increases or anything.

In addition to the above/below the table reporting issue, it would be worth finding out what Worker's Comp laws are in your state. In California, people who employ household help are required to carry Worker's Comp, and the penalties for failing to do so are pretty stiff. When our nanny slipped and fell and hit her head on the corner of a dining chair, giving herself a pretty nasty head laceration, a ride in the ambulance to the ER and a CAT scan, Worker's Comp picked up the tab because that was an on-the-job injury.

There are a lot of really good reasons for doing things by the book.
posted by ambrosia at 8:16 PM on April 12, 2013 [2 favorites]

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