Nanny payment and compensation is a tricky business and demands some clarifications at the very beginning. The International Nanny Association (INA) survey points out that in 2017, nannies made an hourly $19.14. But do not outright jump to a conclusion as you have come across the wage figure. We are going to lay out a detailed map for you to perfectly walk through.

First, the average hourly rate does not tell the whole story as the number may fluctuate depending on level of experience, extent of training and education, urban/suburban/rural geographical location and so on. Second, you have to measure up how much work you are expecting from the nanny. Third, the legal prospects cannot be brushed away because it can bring in uninvited hassles. Fourth, there are minimum work hours or guaranteed work hours, tax and overtime issues as well. 

What factors determine the hourly rate?
  • A highly experienced and well trained nanny is going to cost you a few extra bucks. CPR, paediatric first aid course, sleep and infant feeding techniques and many other professional training sessions in the resume significantly raise the payment bar.


  • What are the areas you expect the nanny to cover? Is it all about the safety and care of the child? Or does it also include some schooling, house errands and voluntary tasks? These questions will be resolved with the scale of payment. No wonder the rate goes higher if you add a few tasks apart from taking care of the kid.
So, How to pay a nanny? salary or hourly?

The Fair Labor Standards Act (FLSA) dictates that nannies have to be paid on an hourly basis. Moreover, you must pay overtime if live-out nannies exceed their 40 hours a week quota. In short, a set salary is the illegal way to go, be it weekly or monthly. They can not be paid a salary as they are non-exempt hourly employees, per the FLSA. Employees, who earn the federal minimum wage and fit the bill for overtime pay, are titled as non-exempt hourly employees.

What is ‘guaranteed work hours’?

This is actually a payment guarantee for working a minimum amount of time per week. Normally, they work for 40 hours each week and it is called the guaranteed work hours. Occasionally, the family may call off some of the days. Say, they are on a vacation or the parents are on a holiday. What are they going to do in these circumstances? The nanny is available but the family does not need her for a few days. Can they cut down the payment? Well, the guaranteed work hours system rules out this option altogether. Even if the family is absent all week, they have to pay for a minimum of 40 hours of service. It gives the nanny an assurance that she can pay her bills no matter what happens. 

What is overtime pay and overtime rate?

The Fair Labor Standards Act (FLSA) says that overtime is how many extra hours the nanny adds to her weekly schedule apart from the fixed 40 hours. The family has to pay 1.5 times the standard hourly wage for the additional work over 40 hours in a 7 day period. For example, she puts in 48 hours and the hourly rate is $20. The calculation would go-

40Hx$20 = $800

8Hx30 = $240

Total = $1020

What about paying taxes?

Nanny tax is paid by the employers. The Internal Revenue Service (IRS) considers an ongoing household helper as the taxpayer’s household employee including babysitters, nannies, butlers, and cooks. If you employ household employees and their wages go above a certain amount, the tax issue comes in effect.

However, nanny taxes do not apply if the family hires a household help via employment agencies. In this situation, the primary employer is the agency and they are responsible for the tax payment.

What else nanny benefits include?

There are additional perks including sick leaves, two weeks of paid vacations, 8-10 paid holidays and full or partial health insurance coverage.

Payment and Compensation