Paying your nanny hourly vs salary – Mistakes you don’t want to make

Picture of a clock

Hourly or Salary – Which is better?

The short answer is hourly.  Note that you can set the the hourly pay rate so it still works like a salary, but we will get to that in a bit.

Why pay hourly?

  1. The legal aspect: Paying hourly is critical to properly calculating overtime pay.  By federal law (Fair Labor Standards Act), your nanny must be paid overtime, at a rate of at least 1.5 times her regular rate, for any hours worked over 40 in a 7 day work week.  One exception is for live-in nannies – although some states do have additional laws making overtime pay required for live-in nannies as well.
  2. The nanny relationship aspect: If you agree with your nanny to a certain fixed weekly rate, this usually assumes some certain number of hours worked per week.  But what happens when you need your nanny for extra hours some weeks?  Many salaried nannies report that they frequently end up working more than the originally planned hours, and then feel taken advantage of when they still get the same fixed weekly rate.

If you don’t consider these scenarios up-front, it can lead to some messy situations.

Guaranteed pay option

One optional variation is to pay hourly but at the same time guarantee your nanny that she will be paid for a certain number of hours per week, regardless of whether she is scheduled for the full number of hours.  The overtime rate of 1.5 times the regular rate would still apply for time over 40 hours.

This perk is very appealing to potential nannies, so can help you to get a higher quality candidate.

How to calculate hourly pay from salary

If you do want to think in terms of weekly fixed salary, you can do some calculations to convert this to an hourly rate, and still keep yourself legal from an overtime perspective.

Plug in the hours and weekly salary in the calculator below to figure out the effective pay rate and overtime rate for your situation.

As an example, say you and your nanny agree to a gross salary of $750 for a 55 hour work week. The standard wage for the first 40 hours would be $12 per hour and the remaining 15 hours would be at $18 (1.5 x $12) – this would give a total weekly salary of $750.

If using the Paycheck Nanny App for Android, you would set your nanny’s hourly rate to $12 and then use the Auto-Fill capability to populate her paycheck for 55 hours every week.  In the Paycheck Nanny App for iOS, just add standard hours and click on all working days.

This mimics salary and automatically calculates the overtime for you – keeping you legal.