Updated: Mar 31, 2020
"What should I pay a nanny and what benefits are appropriate to be offered?"
This is a question we get asked quite often, and we are here to appropriately discuss nanny pay and benefits for nannies living in New Jersey and New York.
[wages for nannies in other states may vary]
Salary VS Hourly
Ultimately, it's up to you as an employer to determine what you pay your nanny. As an agency we do our best to advocate for our nannies, and that's why we are here to tell you that we prefer when nannies are paid hourly. The only time we suggest salary is if it's for a certain amount of guaranteed hours. Here's an example of what we would suggest if you choose to do salary:
Example 1: Live-Out Nanny works 40 hours per week with a salary of $800. Anything over 40 hours is time and a half ($30 per hour). Nanny is guaranteed $800 per week for 40 hours per week, regardless if Family requires nanny for 40 hours per week. [banking hours is illegal]
Example 2: Live-In Nanny works 45 hours per week with a salary of $810. Anything over 45 hours is time and a half ($27 per hour). Nanny is guaranteed $810 per week for 45 hours per week, regardless if Family requires nanny for 45 hours per week. [banking hours is illegal for live-in nannies too!]
Why should you pay the nanny overtime? Do you get overtime at your job? The answer is most likely yes. The Fair Labor Standards Act (FLSA) specifically states that nannies and other household employees are covered by minimum wage and overtime laws.
You may have also noticed that the live-in nanny works for a dollar or two less than a live-out nanny. It is common to pay a live-in nanny a little bit less than a live-out nanny, but not by a large amount.
What to Pay
How much should you pay the nanny? This is entirely dependent on how many children you have, their ages, and the hours needed.
Average Pay for Full-Time (2020)*
1 child: $18-$20
2 children: $20-$22
3 children: $23-$25+
Average Pay for Part-Time (2020)**
1 child: $19-$20
2 children: $21-$23
3 children: $24-$27+
*These averages are based for New York and New Jersey and not based on nanny shares. The younger your children are, the more the nanny should be paid hourly.
**Part-time nannies typically get paid more hourly than full-time nannies.
We recommend this pay for live-in or live-out nannies. As mentioned above, live-in nannies typically receive $1-$2 less an hour than live-out nannies, but the hourly pay is typically the same.
A majority of nannies receive 2 weeks paid vacation and 5 PTO/Sick days, as well as 6/7 major federal holidays. Here are some other benefits we highly recommend offering to your nanny:
Mileage Reimbursement: IRS rate is currently 57.5 cents per mile (as of 2020). We typically suggest that families reimburse every month for mileage.
$100 per year for car detail: If the nanny is using their own vehicle, it's highly recommended to help them with one or two car details - especially if your little one is frequently snacking in their car or they are bringing the children to the beach/park often and tracking dirt or sand in.
Bereavement Leave: Something a lot of nannies and families do not plan for are unexpected deaths in the family. You can offer at least 5 paid days for close relatives.
Maternity Leave: If the nanny wishes to expand their family, then it's worth putting in at least 6-8 weeks of paid leave during that time.
Pandemics: We suggest offering a minimum of two weeks paid leave during pandemics (COVID-19, Hurricanes, etc.) with room for discussion.
Monthly contribution to health insurance: A majority of nannies are required to pay for health insurance our of pocket, and therefore an added benefit to give the nanny is provide a monthly contribution. It can be anywhere from $50-$250 per month. We recommend that our families start off with $50 and then every year increase the monthly amount.
Yearly bonus: Families typically give a 2-4% raise each year (based on performance).
These are benefits we recommend, but there are many benefits you can offer the nanny, such as: pool membership, gym membership, food throughout the day (if they are grocery shopping, they can add it to her list).
Taxes -1099 or W-2?
If you have worked with our agency, then you are aware that we work with GTM Payroll services and highly recommend paying the nanny on the books!
Nannies are NOT 1099 employees because they are not independent contractors. They do not set their own hours, pay rates, weekly schedule, or duties. Nannies are household employees and if they are earning more than $2,100 (2019) per year, then they must claim their wages.
There are so many benefits to paying the nanny legally. The first one is that you, as an employer, will not get in trouble for paying the nanny cash. Paying the nanny legally will help them in the future: applying for a car loan, receiving a mortgage, etc.
Why is it so Expensive?
Simple: because children are expensive.