An Indian diplomat’s been arrested for paying the Indian nanny she brought with her less than minimum wage and lying about it on the visa application. The case itself doesn’t matter to me, it’s a separate debate. But it got me to wondering - in most cases like this, when a foreign national brings household help with them, they would almost invariably be providing accommodation and food in addition to wages. Does the value of those count towards wages?
When I worked at boy scout camp, the staff was… not exactly paid well. I think the average 16 year old staff member got $85 a week. When a asked how that gets around minimum wage laws (really, the staff works 12 hour days 6 days a week), the response I got was that since room and board were provided, that was enough to cover minimum wage laws at the time. Despite board being mess hall slop and room being a wall tent you shared with someone else.
Not that I minded super-much, since nobody was trying to live off those wages, and the price of scout camp would soar if everyone had to be paid minimum wage and time and a half, but that was the explanation given to me. I don’t know why a similar one doesn’t work for the nanny in the above situation (or if prosecutors just gave the camp directors around the nation a pass each year).
I was curious, so I looked up camp staff. Turns out there is an exemption to minimum wage laws for camps that are seasonal, so minimum wage would not have applied to the boy scout camps (and thus they are fine paying less than minimum wage).
Which doesn’t answer the question about room and board, but I found it interesting.
cite: Are Summer Camp Staff Exempt? [Lesser Known Exemptions] | Wage & Hour Insights
I find this:
So basically, the nanny must be paid minimum wage, and then you can deduct a “reasonable” amount for room and board. many lawyer country club memberships have been paid for while looking for the definition of “reasonable”.
A nanny working in Maryland, let’s say, at $7.25 an hour, 160 hours a month (yeah, like a third-world nanny working for a third-world rich bastard will work 40 hours a week) - that’s $1160. he better be providing some royal accomodation to claim a room and food is worth say, $800 a month. Let’s be more ralistic, the nanny was on duty 84 hours a week, that’s $2436 a month. If I read the rules right in the link, he’d be paying her for 7x24 instead which means she’d be filthy rich when she got home.
Not that I think a nanny should be paid minimum wage, but if you know someplace where I can live for $800 a month, food included, please let me know where that is. That’s the cost of an apartment, no food included, where I’m from.
But there is small chance that a nanny will have an apartment of her own. More likely a room. What’s the cost of renting just a room in someone’s house?
Even excluding the food, and renting only a room in a nicer house, can go for $800 in NYC. Where I live it’s probably closer to $600, depending on where you are in town.
It is possible to find rooms for much less than that, but not in a place nice enough to hire a nanny.
There are different laws for camps regarding wages, generally speaking.
Yes there are, see post #3
Under the National Minimum Wage Act, 2000, room and board do count towards the minimum wage, but only to a limited extent.
€54.13 per week for full board and lodgings
€32.14 per week for full board only
€21.85 for lodgings only
Any other payment in kind does not count towards the minimum wage.
Per a post in a thread on the incident, it does not appear that embassy/consulate officials can deduct other expenses from their staff’s wages, and that at least minimum wage for the area being lived in must be paid.
To what extent does the employee have a say? If I hire a nanny and give them a half pound of sauerkraut every night and deduct the fair market value of 0.5 lb of sauerkraut a day from their wages, can they turn around and refuse the food and demand money? Are mandatory in-kind deductions only allowed if contractually agreed to (e.g. your employment contract states that the employer may pay up to 1/2 of your wages in food and lodging)? I would think they would have to be, since food and lodging is not “legal tender” for debts, and wages for work already performed are debts.
The food and lodging must be for the employee’s benefit , not the employer’s for the amounts to be credited against minimum wage,so if the employee doesn’t want the sauerkraut he or she can probably demand cash. For example, state agencies often have facilities on the rounds of prison, psychiatric hospitals and other institutions. Originally these were for the employers’ convenience- in a time before phones and cars, you would want the warden to live on the grounds. Times are different and in my agency this housing is now provided for the employee’s convenience and could be credited against a minimum wage- rather than the warden being required to live there there for his entire tenure, employees choose to live there because they’re new to the area or the rent is low
In the UK BIK’s are certainly taxable. If I was a company director and have a fully expensed car, that will be taxed. If I employ a nanny, give her accommodation, food, and sufficient wages to be taxable, the benefits would be taken into account to calculate her tax bill.
The same rule would apply to the minimum wage. A field worker who gets accommodation can have the cost deducted from his wages. If, as sometimes happens, the employer deducts an unfair amount, that can be challenged.
I would also point that even if lodging and meals are counted toward minimum wage, taxes must still be paid on them. So if someone would make $2000 but is credited with $1000 lodging and $1000 in cash, then taxes are still paid on $2000, and the employee’s W-2 is still going to show $2000.
If you’ve only paid tax on the $1000 cash component, you might justify yourself as having met minimum wage through lodging, but you’ve still run afoul of payroll tax laws.
As others have pointed out, if lodging and/or meals are provided for the employer’s benefit (i.e. you want your nanny on hand to change the baby at 3 am so you insist the nanny sleep next to the nursery) then the lodging is not counted toward minimum wage and not included in the employee’s salary.
In Australia, the provision of accommodation, food,etc may be called a “Fringe Benefit”, and the employer must pay tax equivalent of high income earners income tax on Fringe benefits. There are exempt fringe benefits though, there’s always complications , eg providing accommodation for someone who travels around a lot may be exempt, but probably not for a permanent employee who is working on the employers property all the time.
The fringe benefits amounts appear as income on the tax statements from the tax office (these statements are used as evidence by government departments or charity to verify ‘low’ (or not high) income status . ) so that transferring the income to fringe benefits doesn’t leave eligible for social security or hand outs or discounts.
Again, we’re back to “reasonable”. The nanny’s share of a $3,000,000 penthouse (by square footage) by the UN might be more than her wage, but (a) a minimum wage person would not normally choose such luxury accomodations, and (b) she is in that ritzy a location for the convenience of her employer, not so she can luxuriate in the spa tub and enjoy the penthouse view. A more reasonable question to argue would be, what would the average minimum wage person be paying toward their share of an apartment in NYC (and obviously not in the fancy areas of Manhattan)? Then subtract a portion for the lack of private accommodation, lack of use of living room or kitchen space, etc. depending on permitted use.
The same applies to meals. Leftover Cornish game hen or foie gras may be expensive, but she would likely not be blowing her salary for the month on one meal if she had a choice, so you cannot penalize her for that cost.
What’s missing in the superficial media coverage I’ve seen (and riled up crowds back home in India) is the question - how the heck does the government have the right to touch a foreign diplomat? I assume she’s here under diplomatic immunity. I recall the NYC government kvetching they could not even issue parking tickets to UN diplomats, let alone arrest them for drunk driving and killing people. All they can do is give them the boot.
Oh, and they are now claiming the nanny was paid properly and the balance of her wage was forwarded to her family back in India at her request… Like they can’t make up paperwork and twist arms back home if necessary to construct this justification after the fact.
In most countries that I’m aware of, any payment in kind is part of taxable income. Any benefit given by the employer to an employee, even Christmas bonuses or tickets to sports games, have to be valued(“reasonably”) and that applied to taxable income amounts.