Oct 25 2011

Folks with Nannies and Housekeepers Need to Know Fair Wages Law

It used to be that if your nanny or maid was fired, all you had to worry about was them gossiping about your habits or stealing the silverware on the way out. Not so anymore – now you may get hit with a Federal or State wage and hour claim. That’s what happened to Robert DeNiro who was sued by his nanny for over $30,000 in unpaid overtime. Two primary laws currently apply to domestic employees in New York: the federal Fair Labor Standards Act (FLSA) and the New York Labor Law’s Wage and Hour provisions. These applicable wage and hour laws, including the newly implemented domestic workers law, require families to act like small businesses in dealing with their household help. Believe me when I tell you it is much better to get your house in order BEFORE you are sued by a disgruntled ex-employee.

Usually, families are paying more than the $7.25 per hour required by the minimum wage law. As with most employers families get in trouble because of HOW they pay their help, not what they pay their help. These employees must be paid by the hour and not by a flat wage. So if you are paying them say $500 a week in cash for a 48 hour week (6 days a week, 8 hours a day lets say), you are paying them more than required under the minimum wage law as you only owe $7.25 per hour for the first 40 hours and then $10.85 per hour for the 8 hours of overtime (about $376 per week). But because you are paying a flat wage, if the worker complains, both the NY and Federal Depts of Labor will treat that $500 as being only for the first 40 hours. The DOL will then divide that flat wage by 40 to determine the hourly rate and then use that to determine the overtime you owe. So in our example, they would find that you were paying your worker $12.50 per hour for the first 40 hours and that you owe them $18.75 for the 8 hours of overtime ($150.00). Not too bad, right? Except that the Federal statute of limitation is 2 years (3 if they find a willful violation) and the NY statute of limitation is a whopping 6 years! So in our example in NY if your maid or au pair leaves after working for you for 6 years, then sues you for overtime, you would owe her approximately $45,000! Plus the DOLs usually assess a 100% matching penalty so the total bill would come to $90,000. If the worker lives in with you, then in NY they are entitled to overtime after 44 hours not 40. Under Federal law, live in workers are exempt from overtime requirements so you only have to pay them the minimum wage for the hours worked, regardless of how many hours that is.

Compounding these already difficult issues, many families employing domestic workers pay their employees in cash “off the books,” thereby failing to adequately document their workers’ hours and compensation to ensure compliance with law. Indeed, poor time tracking, errors in overtime calculations, and improper deductions from pay are all common employer mistakes. Of course, paying employees “off the books” does not absolve families of their statutory minimum wage, overtime, and recordkeeping obligations; it merely makes an already difficult compliance situation worse. It is the employer’s legal obligation to maintain appropriate records of hours worked and wages paid. To the extent the employer maintains inadequate records or, as is often the case, no records at all, the employee’s estimate of the amount of overtime worked will suffice to satisfy at least the employee’s initial legal burden. So whatever the worker says, goes! It is not uncommon for household workers to claim to have worked 12 hours a day or more for five or six days a week over the course of years.

To make matters more difficult for those who have fulltime nannies or housekeepers, NY just passed a Domestic Workers Bill of Rights. While the law has many provisions that are lengthy and complicated, here is a summary of its terms:

• Domestic workers’ pay must be distributed weekly;

• Overtime pay must be calculated and paid at time-and-one-half the domestic employee’s regular rate of pay for every hour worked in excess of 40 for the week. If the worker lives in the employer’s home, overtime compensation must be paid after 44 hours. Prior to this law being passed, in NY you only had to pay the minimum wage (at time and a half) not the actual wage on overtime;

• At the time of hire and on or before Feb. 1 each succeeding year, employers must provide written notice of their hours of work, and regular and overtime rates of pay, and set their regular paydays, as well as provide their policies on sick leave, vacation, personal leave, and holidays. Such notices must be written in both English and the employee’s primary language (if other than English). A signed and dated acknowledgement of receipt of such notices is required and must be kept by the employer for at least six years. You must also post all of these rules in your home for the worker to be able to read them;

• Workers are entitled to 24 hours of rest every seven days, or overtime pay if the worker agrees to work on her day of rest;

• After one year of work for the same employer, employees are entitled to three paid days of rest each year. Although this new requirement hardly seems significant, it represents the first time in the state’s history that any employee is entitled to paid time off as a matter of law and creates a precedent for similar legislation in the future affecting other employees;

• Certain anti-discrimination/harassment protections under the New York State Human Rights Law now apply to domestic workers. For instance, the law protects workers from certain forms of harassment based on gender, race, religion, or national origin and prohibits retaliation for complaining of such harassment. Before, households were exempt from these rules;

• When a household employee works 40 hours or more per week or lives on the employer’s premises, the employer is subject to the Workers’ Compensation Law and Disability Law. The employer is required to purchase insurance from New York state or through a private insurance carrier.

Most homeowners do very few (if any) of these things. It is imperative that if you employ a domestic worker you become familiar with all of these rules and get in compliance before you part company with your employees and face a Federal or State lawsuit or investigation!

6 comments

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    • Mark on November 24, 2011 at 8:57 pm
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    Oscar, at what point does an employer become liable for unemployment compmesation benefits for a nanny? For example, what if the Nanny is fired after just a week?

  1. Every state has different qualification requirements. For example in NY state you must have worked and been paid wages for work in at least two calendar quarters in your base period,AND you must have been paid at least $1,600 in wages in one of the calendar quarters in your base period AND the total wages paid to you in your base period must be one and one-half times your high quarter wages. If that’s not to confusing, you can check out the NYS Dept of Labor’s website for more info. http://www.labor.ny.gov/home/ For a claimant, the easiest way to find out if you are eligible is to file a claim.

      • Jon on June 29, 2015 at 7:30 pm
      • Reply

      Oscar – this is an incredibly helpful post- I am dealing with a very similar/nightmare situation… Is there a way I can contact you either to employ your services or recommend someone to us? My wife and I are in desperate need of help!!!

      Jon

      1. Just sent you an email. My email is omichelen@cuomollc.com My office number is 212 448 9933 or in Long Island 516 741 3222.

    • Amira on March 9, 2016 at 12:11 am
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    I’m dealing with employee former nanny..who stole money from us and we let her go, but only to find out that few days later she is suing me with DOL and human rights.
    Mind you I kept her working records hours and payments and DOL didn’t accept it stating that they aren’t “professional ” records and that employee didn’t sign for them.
    My question is how can they believe her ONLY based on her words? She said she worked 24/7 and I didn’t even feed her ????!!!

    1. Its best not discuss the case over the Internet. I will tell you that the DOL and Human Rights are organizations that are almost mandated to believe the complainant. We have helped many folks like yourselves get through these issue. I am in my office at 212 448 9933 or email me omichelen@cuomollc.com.

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