How to Set Up a Household Account for a Nanny

Household accounts, when an employer makes funds available to the nanny for expenses, isn’t a necessity in all jobs but they do make life a lot easier for the nanny and employer.

These accounts can be used for emergencies (e.g. we’re out of diapers!), for convenience (e.g. a milk and bread run), for running the household (e.g. stock up trip to Costco) and/or managing the family (e.g. buying school supplies, contributing to the teacher gift). 

There are 3 ways employers can handle a household account. 

Cash  The simplest way to set up a household account is to keep cash on hand.  The cash system works best when the nanny won’t often need money and when she does, will spend small amounts. 

Credit Card  Providing the nanny with a credit card is the most convenient way of setting up a household account but also offers the least amount of control over spending.  The credit card system works best for families that rely on their nanny for household / family management tasks where large or frequent purchases will be made.   

Debit Card  Providing the nanny with a debit card is a great combination of convenience and control.  Most banks offer debit cards geared towards teens that are perfect for nannies too.  Employers can transfer funds into the nanny’s account without giving her access to theirs.  Employers can receive spending and low balance alerts and customize the spending limit.  The debit card system works well for all situations.

Regardless of how the household account is set up, the nanny should keep an accurate and up-to-date balance sheet detailing deposits, spending and the current balance.  She should also keep all receipts in a central location. 

Are Nannies Responsible for Collecting What’s Owed Them?

Just read the Robert De Niro court case outcome.  Once again, a nanny sues her employer for unpaid overtime and wins a hefty sum.  A pretty common thing these days.  (Do I need to add that the A to Z Nanny Contract helps employers avoid these issues?)

My question  isn’t about that case in particular.  It crosses my mind whenever I read a similar story: what responsibility do nannies have to collect the wages owed them in a timely way?

De Niro’s nanny claimed she was owed 750 hours in overtime.  750 HOURS!  She only worked for them for 11 months so that means she worked about 15 to 18 hours of overtime each and every week without getting paid for it.  She clearly was keeping records so she knew how much she was owed her.  She was making $31.25 per hour so she clearly knew how to communicate her needs on the financial front.  So why did she wait until she was fired to demand payment?

I don’t know the answer for De Niro’s nanny and I’m not implying she did anything wrong or unethical.  However I do know of other nannies who made a financial agreement with their employer and when fired, backed out of that agreement using the court system. 

Let me give an example.  Nanny Jane agrees to work 50 hours a week for $22 per hour.  Nanny Jane is fired.  And ticked off.  She sues her former employers for overtime: 10 hours a week for the year she worked there.  A total of 520 hours or $17,160.  (It’s amazing how quickly that adds up, huh?)   She sues her employers and wins. 

How is that possible?  Easy.  Legally Nanny Jane is entitled to time and a half for all the hours she worked over 40 in any work week.  It doesn’t matter that both she and her employer negotiated her hourly rate based on the real world work week.  Their individual agreement doesn’t override the law. 

Nanny Jane is legally entitled to $17,000 in unpaid overtime but is she ethically entitled to it?  IMO, no.   Just because she’s angry at being fired, even if her anger is justified, doesn’t mean she has the right to sue.   She fully understood and agreed to the terms of her employment.  Her employers were paying her fairly even if they failed to use legally accurate language in their work agreement.  I’m all for nannies getting paid what they’re worth but I’m also all for them doing it in an upfront, professional way. 

What do you think?