Over the past few years as more and more employers include paid holidays in their benefit package, the confusion over how holidays are actually paid has grown. Here I’ll look at the two big questions / trouble spots I see pop up around every holiday.
How many hours are nannies paid for when they receive a paid holiday?
It’s standard that paid holidays are paid based on the nanny’s typical schedule. But since “typical schedule” can be confusing in our industry, let’s look at some examples.
If the nanny normally works 10 hours a day, Monday through Friday, they should receive 10 hours of pay for each paid holiday.
If the nanny normally works 10 hours a day on Mondays and Tuesdays and 6 hours a day on Wednesdays and Thursdays, then the nanny is paid for 10 hours for holidays that fall on Mondays or Tuesdays and for 6 hours for holidays that fall on Wednesdays or Thursdays. If the holiday falls on a Friday, the nanny wouldn’t receive any extra pay because it’s not a regularly scheduled work day. (Higher level nannies often negotiate that if a major holiday falls on a non-workday, they’re paid for the holiday or they receive the observed holiday off with pay.)
If the nanny works a variable schedule, the employers and nanny need to agree on how many hours define a paid holiday as part of the contract negotiation. Some split the difference; for example, if the nanny typically works 8 to 11 hours a day, a paid holiday is defined as 9.5 hours. Others look at the past month and calculate the average number of hours worked in a day and use that number to define an upcoming paid holiday. It doesn’t really matter what formula you use as long as both sides agree to the same formula and the details are clearly spelled out in your nanny contract.
Now I know for many, your next question is “Is paying based on the typical schedule legally required?” Since there’s no legal requirement for employers to provide paid holidays, there aren’t any legal requirements for defining them. Industry standards almost always require more than what is legally required.
I’m seeing more and more new employers defining a paid holiday as 8 hours, a typical workday for most outside the nanny world. While that seems logical at first glance, it’s shortchanging the nanny unless their typical schedule is 8 hours a day. A rarity. A nanny should never lose money by taking earned paid time off.
Do paid holiday hours count towards the week’s overtime threshold?
Legally employers only have to count hours actually worked towards the overtime threshold; they can exclude paid holiday hours. However, the industry standard is that hours from a paid holiday do count. Why? Again, a nanny should never lose money by taking earned paid time off.
Let’s look at an example. A nanny works 10 hours a day, 5 days a week, for a total of 50 hours a week. Their regular rate is $15 an hour and their overtime rate is $22.50 an hour. In a typical week they earn $825, $600 in regular wages and $225 in overtime wages. That nanny gets Labor Day off as a paid holiday. If those 10 hours are counted towards the overtime threshold, the nanny’s weekly pay doesn’t change. They’ll still earn $825. If those holiday hours aren’t counted towards the threshold, she’ll only earn $750. ($15 an hour for the 10 holiday hours and $15 an hour for the 40 hours actually worked.) A loss of $75. This comes down to basic fairness. Let’s say it all together now – a nanny should never lose money by taking earned paid time off.
A Caution for Employers That Want to Forgo Industry Standards
For families that want to save money on holiday pay by forgoing industry standards, let’s expand on the last example above. Let’s say the employer provided 6 paid federal holidays a year, paid the holidays based on an 8 hour day rather than the typically scheduled 10 hour day and didn’t count those hours towards the overtime threshold. In weeks with a holiday, the nanny would earn $720, $105 less than their regular weekly pay. That would save the employer (and cost the nanny) $630 a year. I can tell you from over three decades in the industry, the opportunity cost isn’t worth it. Each time that nanny received a check with that loss, it would be a reminder that they’re being unfairly docked for taking an EARNED paid holiday. They’d feel their work and dedication wasn’t valued and their overall job satisfaction would lessen.
On the other hand, let’s say the employer paid those 6 holidays according to industry standards. The nanny might not even realize it could have been done differently. They’d simply be grateful that they can enjoy holidays with family and friends without having to worry about making up any lost income. They’d feel valued and appreciated and their overall job satisfaction would grow. If they were one of the ten thousand plus nannies who are part of a facebook nanny group, they’d read about the employers who cut costs at their nanny’s expense and chime in, “This makes me love my family even more!”
I understand it’s tempting to cut corners when providing benefits to trim the childcare budget. However, employers should realize cutting those corners often has an intangible, negative effect on the employment relationship and over time, that can contribute to a terrific nanny leaving for a position that provides a more standard benefit package. Remember, for nannies it’s not just about the money (although that matters). It’s about what the money represents: feeling valued and being treated fairly.