For live-in nannies, compensation includes more than a paycheck. In addition to an hourly wage, a live-in nanny’s compensation package may include benefits, perks and other incentives to attract and retain her services.

While many nannies and employers speak in terms of salary when it comes to paying their nanny, legally live-in nannies can’t be salaried employees. Live-in nannies are classified as non-exempt employees and are protected by the Fair Labor Standards Act. For this reason, it’s important for a live-in nanny and her employers to agree on an hourly wage, rather than a weekly salary. Since live-in nannies must be paid at least minimum wage for each hour worked and in some states for overtime, the hourly wage must be used to calculate the live-in nanny’s pay each pay period to ensure that the employer is compliant with labor laws.

In addition to the nanny’s wages, nanny employers are responsible for employment taxes that equal about 10% of the nanny’s gross annual wages. Medicare, Social Security, federal unemployment and state unemployment and disability, where required, must be paid by the nanny employer. Live-in nannies also have Medicare, Social Security and income tax obligations. Fortunately, for parents who pay their live-in nanny legally and are compliant with tax laws, there are incentives in the form of tax credits and breaks that can offset the expense of paying a live-in nanny legally.

Within the nanny industry, certain standards benefits are also expected. Nannies typically receive at least two weeks paid vacation each year, paid sick and personal time off, paid holidays and full or partial contributions to their health insurance premiums. Some nanny employers also offer their live-in nannies contributions towards retirement, annual raises, paid professional days off and other benefits and perks.

Live-in nanny employers who provide pre-tax benefits like health insurance can save money by doing so. When health insurance premiums are paid by the employer for the employee, the contributions are considered pre-tax dollars for both the live-in nanny and employer.

For live-in nannies, stellar living accommodations can be an attractive part of the compensation package. A family that offers their live-in nanny a separate apartment or residence and use of a nanny vehicle makes a job offer hard to turn down. At minimum, live-in nannies should have a private bedroom and bath.

For some nannies, world travel, use of the family’s vacation home, membership to the country club or performance bonuses prove to be strong incentives. For others, a guaranteed yearend bonus for completing a contract is huge.

When negotiating a compensation package, parents should leverage what they’re willing to offer and nannies should consider what they desire to create a compensation package that is mutually agreeable to both parties. A live-in nanny may be willing to lower her desired hourly rate if there are other attractive components in the proposed compensation package.

10 Signs Your Live-In Nanny Might Not Make Enough

Money is a finite thing, just ask any bill-payer, and nobody wants to pay any more than they have to for goods and services. Conversely, nobody wants to work for less money than they believe they are worth. As such, there is a “bargaining table,” a place where supply and demand are weighed and adjusted and a mutually agreeable live-in nanny salary is derived. While there’s typically room left in the agreement for pay increases, some based on merit, others on time of service, occasionally, a nanny will feel she agreed to a salary that turned out to be inadequate, and she may want to make changes before she is due for raise.

While some live-in nannies will simply communicate that they feel a pay increase is warranted, other may communicate the message more slightly.

Here are 10 signs that your live-in nanny may be trying to tell you that it’s time for a raise.

  1. She Asks for More Money.  Your nanny might be the direct type, and just tell you she needs a raise. If she’s a good nanny, chances are she will have good reasons for her request, and it could be to your benefit you to grant her request consideration.
  2. She Gives Meaningful Hints. You may have a nanny who doesn’t like any kind of confrontation, and she may not directly address the issue. You will have to “listen between the whines” to get the message. She may start complaining about the economy or the price of gas or milk, but she could really be trying to say she needs more income.
  3. She’s Asks for Overtime.  If your live-in nanny is volunteering to take on extra hours it could be a sign she need to earn more.
  4. Her Grievances Get Back to You. Perhaps your nanny let it slip at the park that she’s in need of a raise and your neighbor just happened to overhear.
  5. She Slows Down.  A nanny who feels she isn’t being heard or who thinks she is being grossly underpaid may gradually accomplish less and less as time goes by. Employers need to recognize signs that all is not right if they wish to retain their nanny.
  6. The Little Things Change. Perhaps the newspaper wasn’t brought in, as usual, or there’s been no more Thursday Night dessert treats that the family had become accustomed to receiving. A change in the little things may be a symptom of larger problems.
  7. Asking for Advances. If your nanny requests advances on her paycheck and you know she doesn’t drink, gamble, do drugs or buy anything with a Prada label, she may just be having a tough time making ends meet with her current income.
  8. “Testimonials”. When nanny friends of your nanny start visiting, and somehow they all casually mention, at 130 decibels, how much more they make than your live-in nanny, you might take it as a clue.
  9. She’s Thinking About Taking a Part-Time Job. If your live-in nanny mentions she’s thinking about taking a part-time job she may need to supplement her income.
  10. Job Creep Has Crept In. If your nanny mentions that her job duties and expectations have expanded and you clearly see they have, she’s probably thinking a raise is in order.

If your live-in nanny is not receiving the proper compensation she may be attracted to greener pastures, but that doesn’t have to be the case. If an employer pays attention, there will be ample time to make any adjustments deemed necessary to keep a valuable employee and household member.