Determining a Legal, Fair, and Attractive Nanny Pay Package
As a parent, finding the right nanny or babysitter to care for your children is a top priority. In addition to vetting and selecting the perfect caregiver for your children, you have to make an attractive offer to try and hire the nanny. Compensation for the nanny is a major if not the most important part of that offer package. However, determining an appropriate pay rate for the nanny can be a daunting task. Variables that go into determining the right pay include consider factors such as the number of children, the nanny’s years of experience, the cost of living in your area, and any additional responsibilities or benefits you plan to offer. So how much does a nanny cost? Like many questions in life, it depends.
Employer Benefits of Determining Fair & Legal Pay for a Nanny
Taking the time to do the research and craft a fair and legal pay package for your nanny brings several important benefits to the employer–yes, that means you, the parent and the family. Ensure you’re paying a competitive wage that aligns with industry standards and your local cost of living will make you more attractive as an employer and show that you’re serious about investing in your children’s childcare. Understand the full cost of employing a nanny, including taxes, benefits, and other expenses helps you from a budgeting perspective so you can plan ahead and not go over budget. Most importantly, by offering fair compensation and understanding overtime rules, you avoid underpaying or overpaying, which can lead to dissatisfaction or high turnover rates.
Just How Much Does a Nanny Cost? Here are the Top 10 Factors to Consider when Determining Fair Nanny Pay
While nanny pay estimates may vary for each family, most consider the following factors:
Minimum Wage:
Minimum wage varies from state to state and from locality to locality in certain areas. Make sure you understand what the legal requirements are in your area. Consult our minimum wage guide for more information.
Number of Children:
No surprise here. The more children you have, the higher the pay rate will be.
Hours Worked:
Full-time or part-time employment affects the pay rate. Full-time compensation tends to be lower on a per-hour basis but only if you require a nanny full time. Nanny employment is covered under the federal Fair Labor Standards Act. Make sure your employment contract for your nanny meets the rules for overtime pay. See more details on FLSA Overtime Rules for Household Employees.
Another factor that impacts nanny pay is how much PTO (paid time off) and how many holidays you and your nanny agree on.
Overnight Nanny and Overnight Care:
Overnight babysitting and nanny compensation rates are typically higher than standard hourly rates. Rules vary from state to state so you need to consult your local labor laws for more information. You can review our state tip sheets for reference.
Years of Experience as a Nanny or Caregiver:
Like most professions, more experienced nannies command higher wages.
Additional Responsibilities outside of Childcare:
Duties like light housekeeping or cooking may increase the pay rate. Be judicious about what you need and prioritize the responsibilities that will help you the most.
Cost of Living in Your Area:
Pay rates also vary based on your location’s cost of living. Additionally, minimum wage requirements differ from state to state and some by locality. Make sure you do your homework and comply with all labor laws where you live. You can consult our state-by-state tip sheets.
Live-in Nanny or Live-out Nanny:
Do you need the nanny to live with you? There are advantages and disadvantages either way, and different overtime rules apply depending on where you live. See our article on live-in nannies for more information on how this arrangement could potentially benefit both the employer (the family) and the employee (nanny) from a tax perspective and other considerations.
Additional Benefits:
Health insurance, paid time off, and other benefits affect the overall compensation package and have a major impact on how competitive your offer package is to the nanny.
Household Employment Taxes and Workers’ Compensation Insurance
There is a number of federal, state, and local household employment taxes and the need for workers’ comp insurance coverage that a family should consider when budgeting for hiring a nanny. Download our guide to household employment for more details.
Nanny Pay Data (Average Wage Per Hour) by State and Metropolitan Area
HomeWork Solutions has specialized in helping families process nanny tax and household payroll for over 30 years. We have processed over three quarter of a million tax returns and have a large set of fair and legal nanny pay data that can help parents and families determine an appropriate pay package for their nannies and caregivers. The following select wage data is based on our anonymized data set of tens of thousands of actual paid nanny wages, weighted towards the last five years. These wages do not include the employer and employee federal, state, and local taxes and unemployment taxes. These are for informational purposes only.