Household Employee Overtime: Change Coming
May 18, 2016
Household employee overtime rules are commonly misunderstood, and often just plain ignored. The vast majority of household employees – nannies, senior caregivers, housekeepers, etc. – are classified as non-exempt (NOT exempt from overtime rules) employees. These household employees must be paid overtime.
However some more skilled household employees – estate managers, head housekeeper or house managers for example – may be considered exempt or hourly employees. This classification is largely depended on the actual work performed and not on the employee’s title. This is where the change is coming!
Salaried employees are paid the same amount every work week regardless of the actual number of days worked or actual hours worked. The primary work performed by a salaried household employee must be supervision, not actually doing (there is an 80/20 rule used in this determination). Today, in general a salaried household employee who is paid $23, 600 per year or more (last updated in 2004) AND has a span of control over two or more employeesAND whose time is primarily spend in supervisory activities may be considered exempt from the FLSA’s overtime rules.
New Household Employee Overtime Rules
Changes are coming, however, and now is the time to prepare. In March 2014 President Obama signed an executive memorandum instructing the U.S. Department of Labor to review the standards defining a salaried, exempt employee. The US DOL has published proposed rules changes in July 2015 that are widely expected to become effective in 2016.
The key change for household employment is the implementation of a formula that sets the minimum annual salary for an exempt (salaried) worker that keeps up with inflation without the need for rules changes. This formula, when adopted, will increase the minimum weekly salary in 2016 to $913 or $47,476 annually. In 2016, a salaried household employee earning between $47,476 and $134,004 annually must meet the supervision tests described above to retain the exemption from overtime. It is assumed that highly compensated employees earning $134,004 or more per year and who “customarily and regularly” perform one of the exempt duties of an administrative, executive or professional employee are generally exempt. The duties requirement is relaxed because a high level of compensation is a strong indicator that an employee is exempt.
When the rule becomes effective December 1, 2016, all household employees who are paid less than $47,476(2016) no matter their duties are hourly employees entitled to overtime.
Kathleen (Kathy) WebbPresident of HomeWork Solutions, Inc. | Household Payroll & Employment Tax
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As part of our efforts to shine a light on issues of estate management and high-net-worth services, we are featuring the following
article contribution by Starkey International Institute for Household Management, which provides training, education, and
placement services in the area of estate management and private services. We hope you enjoy this educational article.
After negotiating with your new employer, the fine details of your contract, it’s time to start your position. Starting a new position can be stressful the first day when you discover the amount of work and organization it will take to put the residence in order. Especially when the previous House Manager, Chef, or Estate Manager did not leave any documents or information or left outdated documentation that does not reflect the principal preferences, vision of their life style, flavor profile or even up to date vendor contacts.Every one before you worked on their own agenda, each staff member probably never really communicated between themselves, nor worked as a team.
Walking throughout the property, trying to best prioritize all the information you collected can be a daunting experience. What
should be done and how it should be done in order to begin seeing results should be your first order of business. This is what an
employer would expect of you.
Some principal’s feel exasperated from seeing the un-organize situation in their house. Some residences can be as large as
30,000sq.ft. and require many staff to maintain standards. If the position is well paid, they may expect early miracles.
Unfortunately, when they finally hire an educated in Private Service professional, it’s usually too late for a quick organization. It’s
essential that your have the right service management tools in hand do a good job. Starkey’s Service Management System will help
you gather all the essential information and also presents a process of evaluating each staff person.
It’s essential that each staff member have the right technical skills for their position or you may also find yourself spending valuable
time training in addition to assisting the family with their needs. A normal time for fully organizing a residence is from 3 months to one year depending upon its size and the knowledge of the current staff. This needs to be communicated to your Principal when you are hired to set up appropriate expectations.
As you will be seen as the expert and are being well paid to be one, let them know you will be providing as needed: Identifying
individual Service Standards in ten service categories, learning about vendors, ascertaining priorities and special projects, overall
staff training or hiring new staff, setting up discipline, correct hours, and schedules to meet the families and environments needs,
and developing team work before real positive changes will be seen. Household Management is“ Service as an Expertise”.
This article was contributed by:
Executive Director of Development Starkey International
Starkey Certified Household Manager
The International Butler Academy Certified Butler
FAMILY OFFICE MONTHLY, November 2014
Greetings from Starkey! Family life during holidays is always stressful when running a large home with multiple staff. Many of our clients are now new employers with greater assets and multiple properties, but without the experience of what should be expected from staff. We frequently receive calls from our clients requesting what is most often done within homes.
While we train our Starkey Graduates to become “Persons of Possibilities”, it is up to employers to clearly state overall priorities, levels of service standards, and details as to how they would like tasks accomplished. Often it’s a learning process to be able to articulate your expectations. Starkey trains its Graduates to know exact questions in 10 service standard categories to begin to set up the overall container of what quality of life is to you. If your Household Manager has not been trained in the Service Management tools unique to private service, they will typically do things as they would do them, not necessarily how you would want them done. Having this written container of service standard information also takes everyone off of crisis mode!
Housekeeping staff genuinely want to know the specifics of what it will take them to succeed in your home. This requires real knowledge of your expected detail. Our Starkey Certified Managers understand this and can quickly get this information at the beginning of their tenure with you through Zoning and customizing (time and product oriented) Task Sheets for them to follow on a daily basis. Your Management staff must have real Household Management education to know how to do this! Reference our Original Guide to Private Service Management publication for specifics or learn about our Private Service Educational options at www.starkeyintl.com.
Professional staff should expect to work holidays, with alternate days off. This is when you need them for holiday entertaining, caring for visiting family and friends, and “Home for the Holiday’s Experiences”. It makes good sense to inform your management staff members three months ahead of time your intentions such as: “We will not need you for Thanksgiving as we will be in Turks and Caicos, but will need you for all of the Christmas and New Year’s holidays.” This will give them time to make their own family plans. Often employers give a holiday bonus as well. However, most employers typically combine the staff’s yearly bonus with the Christmas bonus. Some clients do not give regular yearly increases in salary; often they
provide between 5% and 20% of annual salary as yearly bonuses (paid and taxed through regular payroll) depending upon length of employment and level of position and responsibility.
Families are often traveling for the holidays or at another residence. A question often asked is, “Is it ok if staff members earn extra money serving at another family’s holiday?” I state clearly, no! It’s bad business for staff to establish relationships with other families in the neighborhood or even other family members at other homes. It’s a good way to lose your staff. We have learned loyalty and privacy should be a clear boundary for clients and staff: Your staff works for only you!
If you are traveling, your home and property should be checked daily by your management staff, some cleaning needs to be completed to keep things in order and special projects can be completed in your absence!
It’s another reason salaries should be appropriately paid for the business and responsibilities a staff member holds. Staff should be paid well enough that they are able to easily meet normal bills, and they themselves also experience some quality of life. A Starkey Standard is “Staff should understand what it takes to serve themselves in order to appropriately serve another.” If you have other homes and it is part of the agreement for the Household Manager to also manage additional homes, it is fair to take them along to create quality of life at the other home.
At Starkey, we make ourselves available to all our Clients and Family Offices to answer these and other questions in this unique profession. It is our intent to keep you in control of your staff members with good management techniques for long and mutually respectful relationships. Have a wonderful and safe Holiday Season.
Mary Louise Starkey, First Lady of Service
Contact us at www.Starkeyintl.com
Telephone 720-788-3398 or 877-STARKEY
When Principals have multiple homes in need of oversight, management, operational staffing, financial budgets and security, it typically falls under supervision of the Estate Manager in cooperation with the Family Office. One might believe that the same standards that are adhered to at the Principal’s primary residence will also stand for the other homes. This is generally not the case. Each home has been purchased for an area lifestyle, overall purpose, location, size and frequency of use by the Principal or Guest.
It may be an original family home one of the Principals has inherited, or in which they grew up. It may be a home or condo in the mountains, by the ocean or in a home town. It may be provided to parents, grown children, extended family members or close friends as a retreat. It may be rented out during high seasons for additional income or left uninhabited for the strict personal use of the Principals. I have seen entire second homes as estates that have multiple historical structures on hundreds of acres that hold the family’s hobbies such as a regulation hockey rink, collections such as historical dinner ware, fine linens, art, or crafts indigenous to an area or culture, used for corporate gatherings or just valuable land held for long term investment purposes.
A Starkey Certified Estate Manager would be well advised to look at the following outline of questions to be answered and placed in a written Service Plan for overall management and care of each home and property. Answer each question:
1. What is the primary purpose for each residence? Think in terms of descriptive adjectives such as “for principal’s family rest and relaxation”; for parents to live and be cared for in close proximity to the Principal’s primary home; for business members to gather for private “think tank” meetings; for Family Foundation purposes for inner city children to experience fly fishing, horseback riding or mountain camps; ranches for paid guests wanting to experience country living; religious retreat centers to support the Principal’s faith.
2. Based upon its use, learn what Service Standards will be adhered to. Go through all of Starkey’s ten Service Standards with your Principal to learn the experience they would like all those using the homes to have. Be sure to note that Principals and Guests often have different culinary expectations such as fresh sea food near the ocean, deer or buffalo in the mountains, and family “comfort foods” when staying in the home in which they grew up. Families will often have special clothing they will leave at the residence. As children grow, this clothing will need to be re-purchased to fit. Clothing will also need to be cleaned and readied including equestrian wear, water skiing and diving wear, snow skis waxed with accompanying equipment well-maintained.
3. Identify what services are expected and needed so that the unique Service Standards can be provided by appropriately skilled and trained staff. Some staff may come from the family’s primary home or special staff will be hired seasonally for use at the alternative homes. This will always include Housekeeping or Household Manager to welcome family and guests; provide bedroom turn-down, serve meals and afternoon drinks. Be sure food, clothing and amenities are in place and other services as requested. Maybe a Chef for daily meals and Entertaining support, a Boat Captain to drive, help with water sports/equipment, a Grounds and Property worker to keep the grass cut, herb or vegetable gardens attended to and flowers cared for. Paying Guests will want all or a portion of the above services.
4. On-going Maintenance and Security for each property. Each Maintenance project should have its own budget based upon multiple estimates. The Estate Manager will need to visit each property at least quarterly depending upon whether or not there is a permanent staff member or caretaker caring for the residence. Security is required based upon location and visibility.
5. Create a household budget using Starkey’s 10 Service Standards as a Chart of Accounts for each home. Present to the Family Office and Family Principal for their edits, understanding and approval. Using Starkey’s Ten Standards Chart of Accounts makes the cost based on its use understandable for all concerned.
Alternative homes are always seen as personal, investments and assets that must be cared for on an on-going basis. The challenge of on-going care is often seen as just an occasional cleaning. Take Care of your Principal and all of their property as though it is your own.
Written by Mrs. Mary Louise Starkey
First Lady of Service
Starkey International Institute