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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Positions in a Private Home need to be clear and concise to be successful. This is the profession of the Business of Household Management. It is literally means setting up a structure much like you would in a business, to effectively manage the home. The Principals depend on their staff and may not be able to manage the home themselves due to personal commitments. Thus, this administrative piece is most important and is typically given to the Estate Manager, the Household Manager, and in some cases where there is a full time Principal actively involved in the home, the Personal Assistant.
In all cases, it is important to set the tone of the environment right away and establish who the staff and vendors are, and what their responsibilities and duties are in the home. This can be accomplished with listing Core Professional Duties or Position Descriptions of each staff member. If this is task is still unclear, Starkey offers a short one-week, 40 hour “Systems Course” via Correspondence or at Starkey to teach the Principal or Family Office staff person who is responsible for accomplishing this task.
Core Professional Duties of the Estate Manager
Overall Management of an Estate, or multiple Estates, is quite different from the detail of daily service delivery. Understanding the difference can make the difference of preventing turnover. An Estate Manager’s position is to take on the responsibilities involved in upholding the Service Vision and overall quality of life of the Principal and their family. The Estate Manager should approach a Private Service Management position with the following perspective:
Over all Service Vision
Learn the depth of clarity necessary to execute all operations within a Service Environment; utilize the Starkey Service Management Model taught in the “Systems Course” with careful, skillful and intentional listening to the Principal’s Service Vision. This written Customized Service Management Plan process will reveal and summarize the economic, human, and social factors required for the successful completion of setting up all aspects of the Principal’s overall Lifestyle, Service Vision and their Environments. Be sure to achieve agreement with the Principal on the Service Vision, Service Goals and the overall Service Management Plan, including the staff and resources needed to fulfill the service expectations for each home and Service Environment.
Service Management Blueprint and Budget
Use the now-complete Service Management Plan Blueprint to gather and analyze the overall budget necessary for the Household/Estate and Service Environment fiscal management. Create and refine monthly, quarterly, and fiscal year budgets in cooperation with the Family Office or Accountant. In some cases, manage the Household/Estate operations and project-specific purchasing, payroll, insurance, etc. specific to those budgets as directed.
Family Office Administration
The Family Office, at the Principal’s direction, is responsible for interfacing with specific professionals including insurance, legal, CPA, architecture and design, human resources and building contractors. They might also oversee the detail associated with invoices; maintain the files and historical data necessary to protect the owners and their private/personal corporate entities. It is always essential to maintain confidentiality agreements to minimize Principal exposure.
Vendors, Contracts and Resources
Locate ethical and reputable commercial service providers within the immediate community, as well as for any remote locations or projects. Maintain highest standards of integrity, steering clear of the unethical “kickback” practices of some vendors. Develop relationships with vendor owners and managers – communicate the Service Standards and behaviors necessary for the privilege of ongoing contracts with the Principal, Household or Estate. Maintain the records, relationships and protocols to ensure quality product delivery.
Staff Training & Management
Utilize the Technical Skills Qualifier™, the Personal Style Identifier™ and the other Service Management Tools of the System to achieve the necessary depth of clarity with the Principal and with staff to articulate the expected Service Standards, Service Styles, and individual and team productivity, expectations of conduct, requisite skill levels and pertinent behaviors. Create and deliver the expected atmosphere and Lifestyle throughout the household or Estate.
Nurture the relationships and protocols in all areas to minimize Principal exposure, and to ensure quality service and product delivery. Whenever possible, cross-train to empower staff, control labor costs and promote the lowest possible turnover.
Educate, develop, manage and nurture talented and committed teams of Private Service Staff, Vendors, and Resources to produce excellent delivery service in the interior and exterior physical Service Environments and Grounds and Property.
Charities and Community Interface
Represent the Principal, Family and Guest priorities within the local and extended community with discretion, gracious yet confidential behavior, intuitive and empathetic service to extended family, friends and neighbors, charitable institutions and professional service providers. Nowhere is the Private Service Manager’s Code of Ethics more important than here. Expect high standards of behavior in all Estate staff.
Safety and Protection Protocols
Complete understanding and support of the Safety and Protection Standards and Security Systems required by the Principal with respect to the Household, the Estate, Transportation and Travel, additional homes, security information, special Guests, and Events of the Principal and immediate Principal and Family.
Communicate on behalf of the Principal regarding Design/Build operations: management of contractors, analysis of estimates, quality standards, research and recommendation of contractors and projects.
Core Professional Duties of the Household Manager
A Household Manager (occasionally called “Butler”) is responsible for daily operations of the interior environments and will pay attention to the many subtle details of the Administrative Standards in addition to recognizing and distinguishing specific Service Expectations. Initial endeavors will include the following:
Immediate Tasks within the first days:
- Development of a working Service Management Plan Blueprint
- Supervision of Household Staff and Vendors
- Preparation of weekly Day in the Life™ Schedules
- Support or preparation of weekly menus and preparation of meals
- Support of the Principal, Family and Guests in their daily routine
- Inventorying of china, silver, crystal, art work, antiques and other collectibles
- Interfacing fully with Family Office, Accountants, Vendors and Resources
Additional Tasks within the first weeks:
- Storing resource books, smart home technology information, warranty and maintenance information
- Maintaining a Safety and Protection Management Plan for the residence and monitoring the security measures
- Organizing the pantry and developing weekly menus and grocery, paper products and other household goods ordering lists
- Developing entertaining schedules, ordering of service and wine cellar management procedures
If there is a Family Office or Estate Manager to pay bills and issue payroll checks, that person will have a list of vendors, budgets, insurance information and other resources. This is invaluable systems information for the Household Manager. Most families have vendors they have worked with over the years that the Household Manager will need to continue to work with. A Household Manager or Butler will scrutinize and supervise the level of service that each vendor is providing and what they are charging for the product or service they are delivering.
Words to the Wise for Staff: Never attempt to change an existing Service Delivery System until you have had a chance to learn what the System is, what the politics of the Household or Service Environment are, and the reasons things have been done a certain way. Then, have frank conversations with your Principals and learn their perspectives and share what you have observed.
Core Professional Duties of the Personal Assistant
The Personal Assistant can often function as the Household or Estate Manager in “smaller” Service Environments where a Principal is the acting Household or Estate Manager and requires Personal Assistant support or as a fully integrated Personal Assistant for a highly recognized Celebrity, Public Personality, CEO or Retired Billionaire. A Personal Assistant is primarily responsible for interfacing on behalf of the Principal with the Family as needed, their family office and Private Service Staff. The main goal is the support of the Principal’s Life Style Goals, Service Standards, Administrative Tasks, Entertaining, and Event Planning and Travel and Concierge needs.
- Manage all Correspondence and the Household, Children’s and other Family members’ Personal Calendars
- Interface and Communicate for Principal with Household Staff, Vendors, and Resources
- Maintain Contact Databases
- Research Specialty Products, Professionals, Vendors and Network Contacts
- Manage budgets and bill paying
- Support the Planning of all Entertaining and Charity Events
- Manage Invitations and RSVPs
- Attend Board Meetings and provide Meeting Minutes
- Manage International and Domestic Itineraries, Reservations, Transportation, and Travel
- Work with their Principal’s Charities and Non-Profit commitments
Mary Louise Starkey
First Lady of Service
Excerpts from the Original Guide for Household Management 2007
Starkey International Institute – 720-788-3398