In the United States, a nanny is almost always an hourly employee, even when the family talks about a "salary." You can quote an annual or weekly figure to make an offer easy to compare, but the pay behind it has to be built on an hourly rate, with overtime for hours over 40 in a workweek. The best way to give your nanny steady income is a guaranteed hours agreement, not a true flat salary.
Below, we explain why, show the math with worked examples, and cover the records you need to keep so both sides have peace of mind.
TL;DR
- Nannies are generally covered by the federal minimum wage and overtime rules, so a flat weekly amount that ignores extra hours is a problem.
- Quoting a yearly number is fine as a way to describe the job. Paying it must still be tied to an hourly rate and tracked hours.
- Guaranteed hours give your nanny a predictable paycheck while keeping you compliant. Extra hours are paid on top.
- State and city rules can be stricter than federal law, so check yours before you set the agreement.
- Accurate daily time records protect you and your nanny. Pay hourly, track hours, and keep a written agreement.
Table of Contents
- Why "salary" does not work the way families expect
- Hourly pay: how it works in practice
- Guaranteed hours: the steady paycheck done right
- How to calculate pay: worked examples
- State and local rules can change the math
- Payroll taxes do not depend on the label
- Pay stubs and time records
- Perspective: why we favor hourly records with guaranteed hours
- Get your pay structure right the first time
- Choosing between your options
- Common mistakes to avoid
- FAQ
- Sources
Why "salary" does not work the way families expect
Most people use "salary" to mean a steady paycheck. Under U.S. wage law, it means something narrower. A salaried employee is generally one who is exempt from overtime, and exemption depends on both a minimum salary and the kind of duties the person performs. The Department of Labor explains that the executive, administrative, professional and similar exemptions require employees to meet job-duties and salary tests, and that a job title alone does not decide it.
A nanny does not fit those categories. The DOL treats nannies as domestic-service employees who are generally covered by the Fair Labor Standards Act's minimum wage and overtime provisions. In plain terms:
- Your nanny must receive at least the federal minimum wage for all hours worked.
- Your nanny must receive overtime at no less than 1.5 times the regular rate for hours over 40 in a workweek.
- A flat weekly amount that stays the same no matter how many hours she works does not meet those rules.
There is a narrow exception for live-in domestic workers, who are exempt from federal overtime but not from minimum wage. Some states and cities go further, which we cover below.
What decides employee status
Families sometimes ask whether calling the nanny an independent contractor, or paying her a lump sum, changes anything. It does not. The DOL says that under the FLSA, a worker's title, 1099 status, and the way pay is calculated do not decide employee status. The real working relationship does. The IRS takes a similar view for tax purposes: when you control what work is done and how, you are generally the employer, and the household employee guidance applies no matter how you describe the pay.
So the question "salary or hourly?" is really two separate questions. First, is she your employee? Usually yes. Second, how do we describe the pay? You can describe it any way that helps you plan, as long as it is calculated and paid in a lawful way.
Hourly pay: how it works in practice
Hourly pay means your nanny is paid a set rate for every hour she works, with overtime when it applies. It is the simplest arrangement to document, because the pay stub, the time record, and the agreement all say the same thing.
Two details trip up many families.
Waiting time can count. The DOL explains that time is compensable when the nanny is on duty, must stay in the home, or is engaged to wait, even if she is temporarily reading or otherwise inactive. Time only goes unpaid when she is completely relieved of duty and free to use it for her own purposes. Nap time while she is home with a sleeping child is, in most cases, work time.
Records are required. Employers must keep the employee's name, Social Security number and address, hours worked each day and each workweek, and weekly cash wages including overtime. Hourly pay makes that natural. You log the hours, multiply by the rate, and you are done.
Guaranteed hours: the steady paycheck done right
Guaranteed hours are what most families actually want when they ask about salary. You commit to paying for a set number of hours each week, say 45, whether or not you need all of them. If she works more, you pay the extra hours. If you need fewer, she is still paid the guarantee.
This is the difference that matters:
| Flat "salary" | Guaranteed hours | |
|---|---|---|
| Pay is based on | A fixed weekly or yearly amount | An hourly rate times a minimum number of hours |
| Extra hours | Ignored, which creates overtime problems | Paid at the hourly rate, or 1.5 times when overtime applies |
| Fewer hours needed | Paid the same | Paid the guaranteed minimum |
| Paperwork | Hard to match to time records | Easy to match to time records |
| Fits federal rules | Generally no for nannies | Yes, when overtime is paid |
The National Domestic Workers Alliance describes guaranteed hours as a best practice that supports fair, professional working relationships and helps families attract strong caregivers. For a nanny, a consistent paycheck makes budgeting possible, even when a family has a canceled day or a sick child. For you, it signals respect and usually improves retention.
What to put in writing
A short written work agreement avoids most disputes. Include:
- The hourly rate and the guaranteed weekly hours
- The regular schedule and how changes are requested and approved
- How overtime is paid and what counts as an hour worked
- Pay frequency, such as weekly or every two weeks
- Time-off, sick days, holidays and how canceled days are handled
- How reimbursements, such as mileage or activity costs, are submitted
If you are not sure how to word it, a nanny payroll setup guide walks through the pieces in order.
How to calculate pay: worked examples
These examples use round numbers so the math is easy to follow. They are illustrations, not recommended rates. Federal overtime is 1.5 times the regular rate after 40 hours in a workweek. Your state may differ.
Example 1: Hourly with occasional overtime
Your nanny earns $25 per hour and works 45 hours one week.
- Regular pay: 40 hours x $25 = $1,000.00
- Overtime rate: $25 x 1.5 = $37.50
- Overtime pay: 5 hours x $37.50 = $187.50
- Total gross pay: $1,187.50
Example 2: Why a flat weekly amount fails
A family agrees to pay $1,000 per week for a 40-hour schedule, which works out to $25 per hour. One week the nanny works 48 hours because of a late work trip.
- Regular pay: 40 x $25 = $1,000.00
- Overtime: 8 x $37.50 = $300.00
- Total owed: $1,300.00
Under a true flat salary, she would receive $1,000 for 48 hours. That is the situation wage rules are designed to prevent, and it can leave a family owing back pay.
Example 3: Guaranteed hours
You offer $25 per hour with 45 guaranteed hours.
- Every week, she is paid for 40 regular hours and 5 overtime hours: $1,187.50
- If she works 48 hours, you pay the 3 additional overtime hours at $37.50, which adds $112.50, for $1,300.00
- If you need her for only 42 hours, you still pay the full guarantee of $1,187.50
The paycheck looks like a salary to your nanny, and the math still follows the rules.
Turning it into a yearly number
Families often want an annual figure for budgeting. With the guarantee in Example 3, $1,187.50 x 52 weeks is $61,750 per year before any extra hours, employer taxes, or paid time off adjustments. Quote it as "guaranteed hours of 45 per week at $25 per hour, about $61,750 per year," not as a fixed salary, so everyone understands that extra hours are paid separately.
State and local rules can change the math
Federal law sets a floor. Many states and cities add protections. State and local laws often provide greater protections than federal law, including stricter rules for live-in staff or daily overtime.
New York City is a clear example. Under the city's published rights statement, live-in domestic employees are entitled to overtime after 44 hours per week, higher than the federal 40-hour trigger that applies to non-live-in employees.
Before you finalize your agreement, check three things for your location:
- The state or local minimum wage, which may be higher than the federal rate (see our nanny minimum wage guide)
- The overtime threshold and whether it applies daily or weekly (see nanny overtime by state)
- Whether live-in arrangements are treated differently
Payroll taxes do not depend on the label
Paying hourly, weekly, or with a quoted annual number does not remove your tax duties. The IRS's Publication 926 is the household employer's guide, and it sets out when Social Security and Medicare taxes apply and when federal unemployment tax applies. For 2026, the cash wage threshold for Social Security and Medicare is $3,000 for a household employee, and federal unemployment tax applies when you pay $1,000 or more in cash wages in a calendar quarter. Confirm current figures in that publication each year.
Because most nannies earn well above those thresholds, assume you will have tax obligations. Our guide to calculating nanny taxes breaks it down step by step. And if the idea of paying cash and handling it informally is tempting, read why tracking hours and receipts matters when you pay a nanny cash first. Your nanny needs a clear income record, and so do you.
Pay stubs and time records
Whatever pay structure you choose, give your nanny a pay statement each pay period. A good one shows gross wages, deductions, net pay, and regular and overtime hours listed separately. Many states require a written wage statement, so it is a safe habit even where it is not required. Our article on nanny pay stubs shows what to include, and a simple nanny timesheet template is enough to start if you track by hand.
The point of all this is transparency. When both of you can see the same hours and the same math, there are fewer surprises and less to argue about.
Perspective: why we favor hourly records with guaranteed hours
We built Caretracker for the nannies and caregivers who do the work and the families who rely on them. What we see again and again is that the pay conversation goes wrong not because anyone is acting in bad faith, but because hours were never written down. A family offers a "salary" to be generous and predictable. Months later, the late nights, early starts and extra weekend hours have piled up, and nobody can say what is owed.
Our view is simple. Agree on an hourly rate. Offer guaranteed hours if you want your nanny to have a steady paycheck. Record actual hours every day, and let overtime follow the rules where you live. That gives your nanny income she can plan around, and it gives you a clean record if anyone ever asks questions.
The app is free for caregivers. They can log hours, see their jobs in one calendar, and approve schedule requests. Families then have the information they need for accurate payroll. Accurate records are what turn a handshake agreement into one both sides trust.
— mercedes
Get your pay structure right the first time
If you are setting up a new arrangement, or you suspect past pay was handled informally, we can help. Our Standard Payroll Consultation package is a $150 one-time consultation for household employers who want to confirm their pay structure, overtime and payroll setup. If your records are incomplete, our Prior Wage Reporting and Household Payroll Cleanup service is built for that situation.
For day-to-day tracking, the Caretracker time-clock app lets your nanny clock hours, request and approve schedule changes, and keep a running weekly total, so overtime is never a guess.
Choosing between your options
Use these questions to decide how to structure the offer.
Will her hours vary a lot? Choose a lower guarantee with a clear overtime policy. A nanny who gets 35 guaranteed hours and is paid for everything beyond that is better off than one who is promised more than you can actually offer.
Is your schedule stable? Set the guarantee at the hours you reliably need. If you are always at 45, guarantee 45.
Does she live with your family? Rules for live-in employees differ at the federal, state, and city level. Look up your location before you promise anything.
Are you comparing the cost of a nanny with daycare? Overtime, guaranteed hours, and employer taxes all affect the total. Our nanny vs daycare cost breakdown puts the numbers side by side.
Do you need help finding the right payroll tool? Our overview of nanny payroll options for caregivers and families explains what to look for.
One more step before the first paycheck: screen the person who will be in your home. Knowing what background check costs for employers look like helps you budget for it alongside wages.
Common mistakes to avoid
- Paying a flat weekly amount with no time records. If hours go over 40, you have no proof of what was worked or what is owed.
- Not counting waiting time. Hours when she must stay in the home and be ready to work generally count.
- Treating the nanny as a contractor to avoid taxes. Title and 1099 status do not decide the matter.
- Changing the agreement verbally. Put schedule and pay changes in writing.
- Skipping pay stubs. They protect both of you and help with taxes, benefits applications and rentals or loans later.
FAQ
Is it legal to pay a nanny a salary?
In most cases, no, not in the sense of a flat amount that ignores hours. Nannies are generally covered by minimum wage and overtime rules, so pay has to be tied to hours worked. You can describe the job with an annual figure, as long as it is calculated from an hourly rate and extra hours are paid. Check your state's rules, since some are stricter.
What is the difference between guaranteed hours and a salary?
Guaranteed hours mean you commit to paying for a minimum number of hours each week at an hourly rate, even if you need fewer. Any hours beyond that are paid, with overtime where required. A true salary stays the same regardless of hours, which is why it does not work for nannies.
How do I calculate overtime for a nanny?
For each workweek, pay your nanny's regular rate for the first 40 hours, then at least 1.5 times that rate for hours beyond 40. At $25 per hour, a 45-hour week is $1,000 plus 5 hours at $37.50, or $1,187.50. Live-in arrangements and some states and cities use different thresholds.
Do I still owe payroll taxes if I pay a flat weekly amount?
Yes. How you label or schedule the payment does not remove household employer tax duties. IRS Publication 926 explains the thresholds and what to withhold and pay. If you are unsure whether you have fallen behind, a payroll consultation can help you sort out what to report.
Sources
- Fact Sheet #79D: Hours Worked Applicable to Domestic Service Employees (U.S. Department of Labor)
- Fact Sheet #13: Employment Relationship Under the FLSA (U.S. Department of Labor)
- Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions (U.S. Department of Labor)
- Paying Minimum Wage and Overtime to Home Care Workers (U.S. Department of Labor)
- Publication 926, Household Employer's Tax Guide (IRS)
- Hiring household employees (IRS)
- Nanny Employment Guide (National Domestic Workers Alliance)
- Statement of Domestic or Household Employee Rights (NYC Department of Consumer and Worker Protection)
- Determining Wages and Scheduling Hours
- What background checks cost for U.S. employers