Occasionally a nanny or other household employee might find themselves in need of cash and may ask you, as their employer, for a loan. For a nanny asking to borrow money, information about borrowing against future wages should be provided to the nanny and included in the employee handbook. If you decide that such activity is permissible, then you should detail what needs to occur to necessitate loaning money to your nanny, what process your nanny needs to follow to request an employer loan, and what steps will be taken to obtain payment of the loan. When considering granting a loan, you should take into account the length of time that is considered reasonable for the employee to repay the loan.
Employers should obtain a signed promissory note from the nanny for any significant amount of money loaned (such as $25 or more). This note should include:
• date of loan;
• loan amount;
• payment method (i.e., loan payments taken directly from paychecks*);
• payment schedule; and,
• the employee’s and the employer’s signatures.
* Some state laws, including New York’s, do not allow this.
The promissory note should be filed in the nanny’s personnel file, and a photocopy of the note should be provided to the nanny.
For questions and more information, please contact us at (518) 348-0400.