Calling Mary Poppins - training, employment, finances, and background check procedures for hiring nannies

Kiplinger's Personal Finance Magazine, Feb, 1999 by Stephanie Gallagher, James Ramage

It's a lot easier to say "supercalifragilisticexpialidocious" than to find and keep a good nanny.

Marilyn and Taylor Clark did what thousands of working parents do when they need someone to care for their children: They cracked the Yellow Pages, called a nanny agency and waited for qualified, experienced applicants to show up at their door for interviews. And waited ...

Among the applicants sent by the Cleveland agency they called to find a caregiver for Charlie, 8, Cooper, 2, and Caitie, 6 months, were a woman who called off the interview when Marilyn mentioned that she planned to do a background check and another who was hired and fired after only a month when Marilyn learned she had been arrested for petty theft. "I realized that all these agencies are trying to do is push as many women through the system as they can," she says. "They're not listening to what you're looking for as far as personality, character or other things you emphasize."

The agency disagrees with Clark's harsh assessment, but its president concedes that in the low-supply, high-demand world of nanny referrals, applicants are sometimes sent on interviews before their references have been contacted. This firm does criminal checks only after an applicant has been offered a job--a practice that is not uncommon in the industry.

One thing Clark's experience makes clear is that it is essential for parents to be as demanding when choosing a nanny agency as when choosing the nanny herself. Make sure you know exactly what the agency will do for you and whether various checks will be made before or after you interview an applicant.

Regardless of what kind of help you get, the search for a nanny is always complicated by one simple fact: In the virtually unregulated day-care business, anyone can call herself a nanny.

Karen Caruso, owner of Mind Your Business Inc., in Arden N.C., a company that specializes in background checks of child-care workers, reports that 5% of the 2,500 to 3,500 checks her firm completes each year turn up something fraudulent about the applicant--anything from a fake employment history to a phony reference, undisclosed alias or criminal history.

The Clarks solved their problem by turning to the English Nanny & Governess School, in Chagrin Falls, Ohio. Graduates of the school must submit to a psychological assessment, fingerprint clearance from the FBI and a motor-vehicle background check. Most important to Marilyn Clark is that her nanny, Amy Clarke, deliberately chose to be a nanny. "With an agency, the girls come in and say, `I'll either take a job in a bank or as a nanny,' whereas at the nanny school, they've spent their money to attend the school. You're getting candidates who in their hearts believe it's their calling," Clark says.

You also get nannies who are trained in everything from child behavior and development to nutrition, safety, CPR, burn prevention, creative play and tax responsibilities. Such credentials come at a price, of course. The nannies pay $4,900 to attend the school and be certified as professional nannies; the families who hire graduates pay salaries of $400 to $1,000 a week, and almost always provide living quarters for the nanny. (The Clarks pay $450 and their nanny does not live in their home.) In addition, parents pay the school $2,500 in fees and agree to employ either a housekeeper or part-time cleaning service so the nanny isn't stuck with heavy housework. "Our nannies are educators," says Sheilagh Roth, executive director of the school. "They have invested far too much money on their education to become cleaning women."

A caregiver who didn't attend a professional nanny school can cost a family less--but not necessarily a lot less. Nanny agencies around the country generally charge $100 to $200 to help you search for a caregiver, plus another $1,000 to $3,000 if you hire one of their applicants. In most parts of the country, pay is similar for live-in and live-out nannies, averaging $300 to $600 a week or $8 to $14 an hour, depending on where you live.

In parts of the country where demand is particularly high and supply is tight--an increasingly common scenario these days--families are attempting to lure nannies with attractive benefits, such as paid holidays and vacations, medical and dental insurance, health-club memberships, college-tuition assistance, year-end bonuses, retirement plans and even cars.

The cost for health insurance depends on where you live. For a short-term, six-month plan that doesn't cover preexisting conditions, you'll probably pay $50 to $75 a month. A continuing plan that covers preexisting conditions will cost somewhere between $125 and $250 a month. The Clarks get off relatively easy on this point, paying the $70 a month it costs their nanny's husband to add her to his company's health plan.

YOUR RESPONSIBILITIES AS AN EMPLOYER

As if finding the right person were not harrowing enough, once you hire that nanny you're also saddled with a new burden--you're an employer.

And as an employer, you're required to pay social security, medicare and unemployment-insurance taxes. The social security and medicare tax requirement kicks in when your nanny's annual wages exceed $1,100; the federal unemployment tax is owed when you pay more than $1,000 in any calendar quarter. (State requirements vary; check with local tax authorities.) The social security and medicare tax is 15.3% of pay. Payment of the tax is typically split evenly between the parents and the nanny (through payroll deductions), but many parents shoulder the entire burden to give their nanny more take-home pay. Regardless of whether the nanny pays half the tax, the parents are responsible for remitting the entire 15.3% to the IRS, either in quarterly estimated tax payments or as part of the federal income tax withheld from their own paychecks.