Nanny claiming unpaid wages

J

JohnFrank2020

New Member
Jurisdiction
New York
We employed a nanny from Sept 19 to April 20. The Nanny resigned from the position 8 months ago and we have not heard from her. We have now received a letter 'for settlement purposes' where the nanny is claiming unpaid wages from both minimum wage and overtime in the amount of $4,000

We had a verbal agreement for payment (no contract) and we almost always paid the Nanny in cash at her request. The weekly payment varied because the hours varied. We were very accommodating to the Nanny: allowed the nanny to bring her daughter to our house so she could watch her and help her with remote learning, generous paid vacation, paid transportation as well as providing transportation ourselves, Christmas and birthday presents, extra pay for late hours. I could not tell you with certainty if the our payment always matched overtime requirements (x 1.5)

We feel as we are being extorted but I also do not know how vulnerable we are to the accusations as we did not keep employment records for hours or payment and this was an 'off the books' arrangement. To me this sets up as a he said/she said case but I want to know what we can expect if we do not comply, how vulnerable are we, and what is the best course of action.
 
JoeFrancis2020 said:
We have now received a letter 'for settlement purposes' where the nanny is claiming unpaid wages from both minimum wage and overtime in the amount of $4,000
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Received a letter from whom? From the nanny or from a lawyer representing her?

JoeFrancis2020 said:
this was an 'off the books' arrangement.
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Does that mean you failed to withhold and pay the various employment taxes that ought to be deducted from an employee's pay?

JoeFrancis2020 said:
To me this sets up as a he said/she said case but I want to know what we can expect if we do not comply, how vulnerable are we, and what is the best course of action.
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No one here has any way of knowing how vulnerable you are. Obviously, your failure to keep proper records won't be good for you, but we don't have any knowledge of what records the nanny may have kept. If the nanny has a lawyer, you would be advised at least to consult with one yourself.
 
not an attorney but been in HR 20+ years with 15 of that dealing with wage/payroll aspects of employees, but it is up to the employer (you) to keep accurate records. If you didn't have a written agreement and she kept records, those will be more believable in a wage claim than
" I could not tell you with certainty if the our payment always matched overtime requirements (x 1.5)".

You really should seek the help of a local attorney because even if you pay a settlement, you want to make sure you get a legal release of any other wage or other claims that might be made.
 
hrforme said:
not an attorney but been in HR 20+ years with 15 of that dealing with wage/payroll aspects of employees, but it is up to the employer (you) to keep accurate records. If you didn't have a written agreement and she kept records, those will be more believable in a wage claim than
" I could not tell you with certainty if the our payment always matched overtime requirements (x 1.5)".

You really should seek the help of a local attorney because even if you pay a settlement, you want to make sure you get a legal release of any other wage or other claims that might be made.
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What records would they be able to keep? Logging hours in a notebook?
 
JoeFrancis2020 said:
What records would they be able to keep? Logging hours in a notebook?
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Yes, that MIGHT be considered as a proper record of hours.

Have you considered using a time sheet requiring that you or your designee sign/approve the hours worked daily?
 
JoeFrancis2020 said:
What records would they be able to keep? Logging hours in a notebook?
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Yes. And having the nanny sign each day as to the accuracy of the hours. Then paying by check and giving her a 1099 by the end of the year.

You're learning how costly it is to pay "under the table." $4000 is enough to be worth getting sued in small claims court. You could lose because you admit that she worked for you but you have no records to prove that you paid her. Or, you can settle for $X that you can both live with.

Life lesson from the school of hard knocks.
 
Or at least some type of a weekly work hours log that you would use to calculate wages. Or hire a nanny through a service who will require them to do so (but that will also cost you).
 
Contemporaneous records are key. A notebook would be fine if you could show they were recorded as you were going along. Making up one after the fact is likely not to mean much.

Listen to HR. I somewhat disagree with AJ. I suspect that the Nanny is not an independent contractor but an employee (which is why she's making the current claims). A 1099 won't magically fix things between the two of you. In addition to the issues between you and the employee, you're going to have issues between you and the tax man.
 
You had an employee and you were an employer under the definitions of law. You didn't keep records, you didn't deduct income tax or FICA (combined SS and Medicare) and send them in to the government. You didn't pay into the unemployment pool in the state.

If she worked 40 hours or more per week you were required (in NY) to cover her with a workers comp insurance police. These are all potential problems for you and may end up costing you a lot more than $4,000. So much for an under the table agreement.

Consider getting an attorney to write you a release letter and just paying her off. Otherwise, you may be receiving all sorts of letters from NY and the IRS if she should chose to report you.
 
I understand there are issues present for me but what about for the other party. I find it interesting that the payment in cash was the Nanny's demand and would give us trouble whenever we tried to pay in check. The few times we did give a check it was cashed at some hole in the wall cash\check store and never a bank. It seems to me that this person was making a concerted effort to hide their income. Wouldn't they also be at risk if this was to go forward?
 
JohnFrank2020 said:
Wouldn't they also be at risk if this was to go forward?
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I'm not sure who "they" are, but your nanny's only risk is that she sues you and loses and gets nothing.

I'm also going to point out that I asked a couple questions in my prior response in this thread, which you ignored. One of those questions is quite germane to your current inquiry.
 
Whether she was paid in cash or check is immaterial. The question is whether you failed to treat her as an employee if you were obligated to do so. It makes no difference if she tells you she doesn't want taxes withheld, minimum wage, overtime, or anything else employees are entitled to. It's one hundred percent on you to follow the law.
 
JohnFrank2020 said:
I find it interesting that the payment in cash was the Nanny's demand and would give us trouble whenever we tried to pay in check.
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Yet you continued to employ her despite giving you trouble.

JohnFrank2020 said:
It seems to me that this person was making a concerted effort to hide their income.
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That apparently didn't bother you much while she was working for you.

JohnFrank2020 said:
Wouldn't they also be at risk if this was to go forward?
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Sure, you could agree to the payment and let her know that you will withhold taxes and FICA, give her a W-2 and report the income to the IRS for both years.

You might never hear from her again.
 

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