Current Trends in the Nanny Market

With the higher costs of living in the San Francisco Bay Area, Nanny salaries are on the rise with a range of $18-25 / hour and higher. To offset the high cost of care parents are connecting with other parents to create share care arrangements and hiring a nanny to care for both children at the same time in one or both of the parents’ homes.

Share care arrangements command higher nanny salaries with a range of $24 – 28/hour but the costs are divided equally between both families. This has proven to be a cost effective solution to hiring a nanny. However, creating and maintaining these arrangements can be challenging. Chirp has developed some basic guidelines on how to create these arrangements - to download these guidelines, click here: Share Care Worksheet-2

Benefits have become expectable for permanent placements whether full or part time and include vacation, holiday and sick pay. Vacation is accrued monthly to provide two weeks annually for full-time and pro-rated for part-time schedules. Most families request at least one vacation week to be taken when the parents take their vacation. Holidays are the standard Federal holidays (New Years, Memorial Day, July 4th, Labor Day, Thanksgiving and Christmas). Many parents offer the day after Thanksgiving. Sick leave is accrued to a maximum of forty hours during the term of employment and can be used to care for a sick family member or relative. To review the San Francisco Sick Leave Ordinance describing terms for sick leave click here: San Francisco Sick Leave Ordinance

Slow growth in hiring for elementary school teachers and nurses has brought recent graduates into the market; many of these young women have cared for children on a part-time basis while in school. These candidates are often good candidates for families needing short term or temporary childcare while the candidates continue to find work in their chosen professions.

Three Essential Health and Safety Issues for Your Nanny

There are 3 health and safety issues you want to discuss with your Nanny. 1. Medical Emergencies

2. Earthquake and Flood Preparedness

3. Fire and Police

Medical Emergencies

Before leaving your child with your Nanny for the first time, be certain you have posted a list of names and contact numbers of people who can be reached in a medical emergency. Don’t put the list in a drawer or on a cluttered bulletin board! Your Nanny may not find it when she needs it.

There are three levels of medical emergencies that can occur with children. Review these with your

Nanny and provide her with the important information and paperwork to handle them.

Level I: The Expectable Bumps and Bruises of Daily Life

Children fall, bump their head or scratch their knees. Nannies should treat the injury and contact the parents when they return home.

• Nannies should know where to locate the first aid supplies in the home and car.

Level II: Child’s Health Requires Immediate Attention

Children can injure themselves, suddenly spike a fever or otherwise require immediate medical attention. Nannies should contact the parents immediately and together decide a course of action. This may require an emergency visit to the pediatrician, after-hours clinic or hospital.

• Nannies should carry an Emergency Medical Treatment Form in their purse, car and know where to locate one in the home. This form contains all the information medical personnel need to begin treatment without waiting for the parents to show up.

• Nannies should know where the pediatrician’s office, after-hours clinic and hospital emergency room is located. The Nanny’s name should be in the child’s medical record file so she is known to be the child’s caregiver.

Level III: 911 Call

Nannies should recognize when a 911 call is required and what information to provide when making the call. Nannies should call 911 first and then contact the parents.

• Information to give 911 Operator

a. Address (House Number, Street, City and Cross Street)

b. Telephone number (including area code)

c. Number of people injured

d. Names of the children injured

e. Ages of the children injured

f. Nature of the emergency (burn, broken, can’t breathe, choking, heart stopped

Disaster Preparedness

Because San Francisco and the Bay Area are high risk for earthquakes and mud slides review with your Nanny the procedures for handling these disasters. Show her the location of the Emergency Disaster Kit and where you will all meet if it is not safe to be in your home. A disaster kit should be located near the safest exit of your home and an additional kit in the car.

• Nannies should have contact information for two responsible adults who live out of state and who would be notified of the Nanny and child’s location when a disaster occurs. Cell phones for local calls are not reliable in a disaster.

Note: The American Red Cross has an excellent APP for creating a Disaster Plan! From your mobile phone, download the APP directly from the APP link and search for “redcross”. Download the Earthquake Notification APP - or call "**REDCROSS" (**73327677) and they will send you a link to download the quake alert app to your iPhone or Android device or you can download them directly from the iTunes or Google Play app stores.

Fire Safety

Review the location of and how to use the fire extinguishers and smoke detectors in your home. A Nanny should also know the best escape routes from your home in a fire and how to find them if there is thick smoke.

Police Safety

If you have a burglar alarm system in your home, review the procedures to activate/deactivate the alarm, including the code to provide the response unit when an alarm is sounded so they know it is a valid call

Legal Responsibilities when Hiring a Nanny

It can come as quite a surprise to parents that four Government agencies require parents to comply with regulations governing nanny employment.   Parents should be aware of these regulations and make decisions about how you will handle your responsibilities to these agencies before starting a nanny search.   Your decisions will affect the pool of candidates available and the cost of care. The Four Government Agencies and Regulations Governing Nanny Employment are:

1. Department of Homeland Security and Immigration Reform and Control Act
2. Internal Revenue Service
3. Department of Labor
4. Department of Motor Vehicles

department of homeland security and immigration reform and control act

Parents hiring a Nanny are required to comply with the Department of Homeland Security (DHS) regulations and the 1986 the Immigration Reform and Control Act (IRCA) and check to be certain their Nanny has documentation to work legally in the U.S. Section 1324a of the IRCA prohibits employers from hiring an employee “knowing the (employee) is an unauthorized alien.” This extends to parents hiring a Nanny. The DHS has listed the acceptable documents on Form I-9. Parents must verify the Nanny is an authorized alien by examining these government-approved documents and listing them on Form I-9 to establish their Nanny’s identity and authorization to work. The list of acceptable documents varies but includes a passport, a resident alien card, Social Security Card and driver’s license. Parents are expected to verify that the documents reasonably appear genuine and to retain Form I-9 in the event the government decides to inspect it. Failure to comply can result in criminal sanctions, civil penalties or fines.

There are considerable challenges for parents attempting to comply with the IRCA. First there is the practical problem of identifying fraudulent documentation. The counterfeit document industry is quite sophisticated and thriving. For $120 a Nanny can get a Social Security Number that is fraudulent or stolen information, but not necessarily false information. The Social Security Number may have been stolen from someone else or have belonged to someone that is deceased.

Another challenge is due to the Nanny market being without Government regulation bring many undocumented workers to the market. To increase the pool of available applicants, some parents forego documentation as a condition of employment.

Added to the decision about whether to comply with DHS requirements is the lack of oversight by immigration officials. Following the passage of the IRCA, the Immigration and Naturalization Service (INS) employed only 350 people to oversee compliance and enforcement. Unless a parent ran for public office or worked in a position subject to public scrutiny, most parents fell under the radar screen of the INS and DHS.

Recently the Social Security Administration (SSA) has jumped onto the bandwagon to assist the INS in overseeing compliance and enforcement. The SSA has sent “no-match” letters to large corporate employers when the W-2 forms for their employee Social Security Numbers do not match their SSA records. There is considerable lobbying by various interest groups to halt this practice.

For the majority of parents hiring a non-documented Nanny, the risk comes when their Nanny returns to her country of origin for vacation or a family emergency. It can be very difficult, if not impossible, for her to return to the U.S. if she has violated the terms of her previous entry. Parents are left without childcare and children are left without the opportunity to say their good-bye to someone who has cared for them.

It is very important that you make a decision on whether you would hire a candidate without documentation to work legally in the U.S. If you decide to hire only documented candidates, this must be part of every announcement posted and part of your pre-screening discussion with all candidates.

Legal Issues: Worker's Compensation

Parents don’t often consider Worker’s Compensation Insurance for their Nanny. They either don’t realize they can be held liable for the cost of an injury if their Nanny gets hurt on the job or they expect she is covered under their homeowner or renter’s insurance policy. Unfortunately, this is not always true. The U.S. Department of Labor requires compulsory worker’s compensation coverage for Nannies working in 26 states. The extent of compulsory coverage differs by jurisdiction. For example in California anyone who cares for and supervises children and earned $100 or more within the previous 90 days from the date of injury must be covered under Worker’s Compensation.

Parents can obtain Worker’s Compensation coverage for their Nanny by adding a rider to their homeowner or renter’s insurance policy for an average cost of $150 annually. A Nanny does not need documentation to be covered under the policy since the insurance company is private. Equally, a Nanny does not need documentation to sue a family for an on-the-job injury – or to be awarded the claim if the judge determines it is valid.

Please the U.S. Department of Labor web site for information on state Worker’s Compensation laws and the extent of compulsory coverage in these states.

Legal Issues: Internal Revenue Service

According to the Internal Revenue Service (IRS), Nannies are employees and parents are employers. The IRS for the following reasons does not consider nannies independent contractors:

• Nannies do not provide “project-based” work.
• Nannies are not in control of their work, i.e., the hours, days and responsibilities of the work   they perform.
• Nannies do not bring their own tools with them.

The IRS requires that parents who pay a Nanny more than $1,400 in a calendar year withhold taxes from her gross salary. The required tax withholdings total 7.25-11% of a Nanny’s gross salary: They include:

• Half of a Nanny’s Social Security and Medicare costs: 7.25% of her gross income
• State disability insurance: varies by state

Parents are not required to withhold a Nanny’s federal or state income taxes from her gross income. Nannies can elect to pay these taxes at year-end when they file their tax return. Personal income taxes can be minimal to 36% or higher based on filing status and annual gross income. Employers are also responsible for paying their portion of taxes on their Nanny’s gross salary. These include half of a Nanny’s Social Security, Medicare and Unemployment Insurance and other state employer taxes. These taxes total 9-11% of a Nanny’s gross salary:

• Half of a Nanny’s Social Security and Medicare costs: 7.25% of her gross income
• Federal and state unemployment insurance: 2-4% depending on the state
• Other state taxes, such as employee training taxes or work force taxes

Many parents do not withhold taxes from their Nanny’s salary. These include well-intentioned parents who want to comply with government regulations but are caught in the web of the unregulated Nanny market.

Parents want the best care for their child. Among the candidates they must select from are the following:

• Nannies who cannot have taxes withheld because they don’t have documentation.
• Nannies who do not want taxes withheld in order to increase their take home pay.
• Nannies who want their employer to pay their taxes.
• Nannies who will pay their own taxes but charge more to cover part or all of their taxes.

Because the pool of Nanny candidates includes those unable or unwilling to pay taxes on their salary, the expected hourly rate Nannies charge is almost always quoted in terms of net hourly rate (or what a Nanny takes home after taxes). Parents who want to comply with IRS regulations must increase this hourly rate by 9-11% to cover taxes.

Parents who pay taxes on their Nanny’s salary can recover part, if not all, of their employer taxes by participating in a Dependent Care Assistance Plan (DCAP) set up and managed by their employers. The federal government allows parents to set aside up to $5,000 of pre-tax income annually in a DCAP. This tax break can recover as much as $2,000 in pretax savings, most often enough to pay the Nanny tax. Parents who do not have a DCAP available can claim a Child or Dependent Care Tax Credit on their year-end tax return. This tax credit allows 20-30% of childcare expenses up to $3,000 for one child and $6,000 for more than one child.

There are several advantages to paying taxes on a Nanny’s income. They include:

• It eliminates the risk of getting caught. If parents are audited and found not to have paid taxes on the Nanny’s salary, they are subject to penalties and interest on the unpaid taxes. This can occur many years after a Nanny has worked for them. For example, a Nanny files for unemployment insurance and lists her previous employers. This triggers an audit of the parents and denial of coverage to the Nanny.
• Social Security and Medicare benefits: When they retire Nannies can recover $5.00 in benefits for every $1.00 contributed during their working years.
• Unemployment Insurance: Nannies are eligible to receive up to 50% of income for six months if they lose their job due to no fault of their own.
• Employment History: With reportable income, Nannies can apply for a loan to purchase a car, home or pay for college and other personal expenses.

Several resources include do-it-yourself software to personalized payroll services assist parents in setting up and managing employee payroll accounts.  Chirp recommends Breedlove & Associates, the experts in the industry on nanny payroll tax services.

Background Checks

The most important requirement of hiring a Nanny is also the most often overlooked: that Nannies have minimum health/safety and background checks conducted as a condition of employment. Too often parents overlook these requirements as not essential, particularly if their Nanny came on recommendation from a known source. Parents argue, “She worked for my neighbor for years and I’ve seen her with the kids. If I ask her to go through a background check, won’t that imply that I question her character and integrity? Why would I start a relationship on that level?”  The answer is simply because her work is taking care of children and that is serious business. Just as in any profession with minimal employment standards, Nanny employment should have set standards. Unfortunately there is no government agency that sets standards for in-home childcare providers.  Parents are expected to set the bar for Nannies – and this bar often sinks to the lowest level.

This is an unlicensed and unregulated market. Anyone can say they want to care for children. An applicant does not need experience in childcare, knowledge about how to handle medical or safety incidents with children, a safe driving record or have a clean criminal record. It is a parent’s responsibility to set the standard and expect a Nanny meet it.

Essential Background Checks

1. Driving license valid in the state you reside
2. Driving record clear in all states in which she has held a license
3. Criminal and court records clear
4. Social Security and/or green card verification
5. Authorization to work in the U.S.
6. Verification of Education

There are many online organizations, such as private investigators and background check companies offering services to run a criminal record report on an individual. The industry standard in California is the TrustLine Registry of California. TrustLine is the only statewide agency with access to three databases that are not accessible to other companies. TrustLine uses both fingerprints and a California driver’s license (or California Identification Card) to process a candidate through these three indices:

1. California Department of Justice Records for any convictions or allegations of crime in the State of California;
2. California Child Abuse Central Index for any substantial allegations of child abuse and neglect; and
3. FBI Criminal History System for high crimes and misdemeanors.

Once candidates have received clearance from TrustLine they are placed on its Registry and will remain on the Registry until such time as they do something to warrant removal from the Registry. Parents must check periodically to see if there have been any changes to the Nanny’s status. Many Nannies are on the Registry when they seek employment. Parents considering hiring a Nanny on the Registry can call TrustLine and receive a clearance letter. A Nanny not on the Registry can receive application forms and instructions online at www.trustline.org.

Reputable background check companies provide a valuable service for parents, particularly in combination with TrustLine. These companies check a candidate’s records in areas that TrustLine does not access. Pre-employment background checks cover the following eight areas:

• Criminal and civil court records
• Driving records
• Credit reports
• Academic and professional license verification
• Lawsuits
• Social Security number verification
• Reference checks
• Bankruptcies, tax liens, judgments

Parents should ensure the checks provided are thorough and meaningful.  Chirp recommends PFC Information Services (510-653-5061).  Lyn Peterson, owner of PFC Information Services provides reliable nationwide pre-employment screening services for all types of employees - from licensed professionals to Nannies and factory workers.

According to Lyn Peterson, there are several ways to evaluate information provided in a pre-employment background check:

• Social Security Number (SSN) verification gives address and name history associated with the use of the SSN. This informs where and under what name(s) the criminal checks should be made.  Social Security Number verification information can be cross-checked with an applicant’s verbal and written work/personal history for inaccuracies or missing information. Social Security Number verification can detect fraudulent SSN’s numbers issued to someone other than the candidate.
• Department of Motor Vehicle (DMV) records can show reckless driving, driving under the influence (DUI) convictions, moving violations, accidents or numerous unpaid parking tickets. These can indicate a substance abuse problem, impulsive behavior or just poor judgment.
• Credit reports will show whether a candidate has excessive debt, judgments, tax liens or bankruptcy and can indicate poor judgment in the handling of finances.

Typically a report is issued within one to two days. The service conducting the check will provide the necessary authorization forms for the candidate to sign. Parents cover the cost as it is to their benefit and at their request. It is a parent’s choice whether to give a copy of the report to the candidate for her records.

The more types of background checks you conduct on a candidate, the more powerful the information received. Usually, if someone has a criminal record, there is a greater chance of inconsistencies with names and addresses on a Social Security Number, unpaid parking tickets and poor credit. Taken together, they point to patterns of behavior.