Nanny Pay and Benefits - What's the Norm?
"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 for the year 2022. Unfortunately the cost of living has risen, which means wages for people, including nannies, have increased. We have made this chart as a guide and will break it down further below.
[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 (2022, assumption the nanny has 1-3 years of experience)*
1 child: $18-$20
2 children: $20-$22
3 children: $23-$25+
Average Pay for Part-Time (2022, assumption the nanny has 1-3 years of experience)**
1 child: $20-$22
2 children: $22-$24
3 children: $24-$27+
*These averages are based for 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. Overtime for live-out nannies starts at 40 hours per week and overtime for live-in nannies starts at 45 hours per week.
How to Determine Pay as a Nanny and an Employer
There are many factors that come into play when we discuss pay - education, years employed as a nanny (after the age of 18), trainings, and certifications. Here is how you can make sure you are asking for the correct amount for your experience and you are paying the nanny you hire the amount that matches their experience. Assumption that each nanny job requires the following: assisting with cleaning up after the children, doing the children's dishes, and assisting with the children's laundry. Any additional tasks will require more added to their hourly pay.
New Nanny Examples:
5 years of experience working in a daycare and 1 year of experience as a nanny. Take into consideration only the nanny experience, which means 1 year of experience and not 6 years. If you have one child and need full-time care (40 hours per week), paying $18-$20 is appropriate. Add $1-$2 more for each additional child (a higher amount if the children are young, such as infants or toddlers).
3 years of experience as a nanny with training an Associates in ECED. You have two children and require care for 45 hours per week. The nanny's experience matches up to $21-$23 per hour with overtime after 40 hours. Again, add an additional $1-$2 for any other children.
Experienced Nanny Examples:
3 years of experience working as a nanny with Montessori training. You have one school aged child and are expecting one in the near future and require 40 hours per week. $23 an hour to start is appropriate for the nanny's experience with an additional $2 when the infant arrives.
5 years of experience as a nanny with training courses from USNA/INA. You have three children and require 40 hours per week. $25-$28 per hour is appropriate for their experience and your needs.
Advanced Nanny Examples:
5 years with certifications and trainings from USNA/INA. You have two children under the age of 10. $28-$30 is appropriate for their experience.
8.5 years with a degree in ECED and their Newborn Care Specialist certification. You have one school age child and a newborn on the way. You require 30-40 hours per week. $29-$31 to start with an increase in hourly pay when the infant arrives.
Elite Nanny Examples:
10 years of experience as a nanny with trainings and certifications. You have three children under the age of 10 and you require 30 hours per week. $35-$37 is appropriate for their experience.
20 years of experience with multiple trainings, certifications, training as a Montessori teacher, and they have their Newborn Care Specialist certification. You have two children and require 40 hours per week with more household assistance (scheduling appointments, grocery shopping, etc.). $40 an hour to start is appropriate given their prior experience and credentials.
As you can see, many factors play into a nanny's pay; the rates seem high, but not every nanny will meet those rates. If a family is unable to afford the rates of an elite nanny, then working with a new or experienced nanny might be the right choice for them as they will still be receiving quality care, just with a nanny who has less experience than an advanced or elite nanny.
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 58.5 cents per mile (as of 2022). We typically suggest that families reimburse every month for mileage. (Technically this isn't a benefit and should be included regardless if the nanny is part-time or full-time)
$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 to 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 and the cost of living has unfortunately risen for everybody within the past two years.