There is a well-publicized class action law suit in the Federal District Court for Colorado that alleges that au pair agencies failed to obey state minimum wage laws, keeping au pair pay at $4.35 an hour. The suit was initiated by the non-profit Towards Justice and was recently joined by a heavy hitting law firm, Boies, Schiller & Flexner.
The U.S. Au Pair Program is billed as a cultural exchange program where young foreign adults are granted one or two year visas to live with and provide child care to U.S. host families. According to official program rules, the young adult may work no more than 45 hours a week, and must live with and be treated as a family member during their stay.
According to the Washington Post, the “attorneys who filed the lawsuit say the sponsor agencies have turned the au pair program into a source for the cheapest child care in America, a far cry from its roots as a cultural exchange program. Pay for au pairs has remained extraordinarily low, even as salaries for traditional nannies and the cost of day care have soared in recent years.”
Families with an au pair pay an average of $8.00 per hour per year for the au pair, when factoring in the au pair’s stipend and au pair agency fees. By contrast, a nanny typically is paid twice this amount, a significant difference to the hiring family.
U.S. nannies and nanny placement agencies often compete for work with the au pairs and the au pair agencies. INA consulted with member Kathy Webb of HomeWork Solutions for some background on the economics of the program.
Webb: The au pair agency fee will run the hiring family around $9000, depending on the agency. This covers their match programs, the au pair’s visa processing, and round trip air fare for the au pair, typically from their home country to a major port of entry like New York or Los Angeles. The au pair also pays between $1000 – $2500 to the agency to process their paperwork, match them, do background screening and providing one week of orientation training. The hiring family also typically pays the domestic transportation (air fare usually) from their entry point/orientation training location to the family’s home.
Webb: U.S. State Department program guidelines state that the au pair must be paid at the minimum wage for 45 hours of work per week. The program allows the family to deduct 40% of the Federal minimum wage as the value of room and board. The Federal minimum wage is $7.25 per hour. According to the programs (NOT the U.S. State Department), they state that because the program is a Federal program that the Federal minimum wage is the number the calculations should be based on nationwide. Au pair wages are currently calculated as follows:
|45 hours * 7.25 =||$326.25|
|40% room & board deduction =||($130.50)|
|Weekly au pair stipend =||$195.75|
The law suit alleges that the program is misleading families and disregarding the 29 states that have higher minimum wage rates than the Federal rate. It is important to understand that under labor law, the higher of the state or Federal minimum wage is what a U.S. worker must be paid, at a minimum. Additionally, other J-1 visa holders (Summer Work Travel participants for example) receive higher pay in states with higher minimum wages.
Let’s take Washington DC as an example. In Washington the minimum wage is $10.50.
|45 hours * 10.50 =||$472.50|
|40% room & board deduction =||($130.50)*|
|Weekly au pair stipend =||$342.00|
* It is possible a court may allow a 40% deduction of the state minimum wage, which would be $189.00 in the example above, and the stipend would become $283.50.
Webb: Families in the 29 states that have minimum wage rates higher than the federal level should be concerned. Why? Part of the au pair agencies’ response to the class action suit claims “…that if anyone is responsible, it’s the sponsoring families who should be paying au pairs the (higher state) minimum wage.” In essence, it appears the agencies are telling all families that $197.75 is the weekly stipend, and making no effort to educate families about different state minimum wage levels. This is the core of the law suit, and the au pair agencies have essentially thrown their client families under the bus with their response.
According to a report in CBS News Market Watch “Although the plaintiffs aren’t now suing the tens of thousands of families who employed the au pairs, that hasn’t been ruled out.”
Webb: If the court rules that the au pair agencies have violated minimum wage laws the agencies may be required to make back wage payments and liquidated damages to all affected au pairs. It is possible that the court may rule that the hiring families are responsible for the back wage payments and liquidated damages. In unpaid wage claims liquidated damages are generally defined as equal to the amount of unpaid wages. In the Washington DC example above, the total claim for a year could equal $15,000 to each au pair.
HomeWork Solutions offers both household payroll and household payroll tax compliance services to US families on a nationwide basis and has partnered with INA nanny agencies since 1993. Kathy Webb serves in the INA Board of Directors as Immediate Past President, and chairs the INA’s Government Affairs Committee.
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