Calculating the cost of childcare in divorce proceedings can be a complicated endeavor. And if all the costs are not included in the analysis, your client could lose out on a substantial amount of money.
While simply adding up the monthly costs of daycare can be relatively straightforward, the costs of hiring a nanny are numerous and by no means obvious. Indeed, if you simply penciled in the amount of the nanny’s annual compensation, you would significantly underestimate the cost of hiring and employing the nanny.
First, you must consider the cost of hiring a qualified domestic employment agency (often referred to as a nanny agency) to begin a search.The costs of agencies start with $100 and $250 for initial registration, and go on to 14-18% of the nanny’s total annual compensation (including benefits, room & board) as a fee. With a nanny making approximately $35,000 per year or more, the agency’s placement fee alone likely will exceed $5,000.
In addition, many families run background checks on employees, and it is not uncommon for families to require physicals or drug testing as well.The dollar amount of these background checks, physical exams, and drug testing is typically hundreds of dollars, but can get higher as depending on how extensive you want to get. Once the family hires the nanny, her compensation (including but not limited to wages, meals, insurance, or other benefits and amenities provided to the nanny) is the largest component of the cost of childcare. Remember as well that nannies often receive holiday or annual bonuses, and this compensation should be included in the childcare cost as well.
In addition to these compensation costs, because the family is almost always the nanny’s employer (nannies are virtually never independent contractors), the cost of childcare also should include the cost of the employer’s share of taxes on the nanny’s compensation.
These taxes include 6.2% of the nanny’s wages for Social Security (on wages up to $102,000 for 2008) and 1.45% of the nanny’s wages for Medicare (taxable on all wages), as well as a variety of smaller federal and state taxes.When added up, these taxes can add close to an additional 9% of the compensation for the nanny.
Because of how burdensome and complicated it can be to report and pay taxes for payroll, it’s common to hire attorneys, accountants, or payroll firms to handle these tasks. The cost of these services also should be included in the overall childcare cost.
Finally, there are insurance costs that should be considered as well. Many states require household employers to provide worker’s compensation insurance for nannies and other household employees. Similarly, if the nanny is going to be driving the family or even her own car in the course of her employment, the family also should obtain appropriate auto insurance as well.Again, the both the costs of worker’s compensation and car insurance should be added into the childcare cost inquiry.
A qualified expert witness can assist family law attorneys in calculating these childcare costs.A qualified expert in this area, can help you calculate how the compensation may differ based on what geographical location you live in, as well as what the local nanny agencies charge. The expert also can attest to the taxes, payroll and insurance costs from firsthand experience with the domestic employment industry.
The best expert resource for this testimony is an individual with a thorough knowledge of entire domestic employment industry including employees, agencies, taxes, payroll and insurance. This one expert can testify to the entire range of subjects and ultimately provide the client with a comprehensive and effective childcare cost report.
Using an expert in this field can significantly increase childcare cost recovery for your client, by making sure that all childcare costs are accounted for in the analysis.
This Childcare Expert Witness is the Founder of a leading law firm representing household employers and domestic employment agencies. He is one of the many experts featured by Consolidated Consultants: The Expert Witness Referral Company.He has served as an expert witness in cases involving household employment and the cost of childcare for divorce proceedings.He is also a member of the Board of Directors for the International Nanny Association.
