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The Basics of a Contract |
by Tom Copeland
Family child care providers are generally free to construct their own contract with the parents of the children in their care. There are two exceptions:
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Some state licensing rules define what should be in your contract, so check with your local licensor before finalizing your agreement.
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Federal anti-discrimination laws make it illegal for providers to discriminate in their contract on the basis of race, color, gender, religion, age, disability, or national origin. Your state or local government may add additional categories such as sexual orientation.
Other than these limitations, providers can establish whatever rules they want in their contract. All contracts, however, should contain the following four clauses:
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The names of the parties to the contract (the parent(s) and the provider), as well as the name(s) of the children.
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The terms of the contract: the days and hours the provider is open and the parent fees for care. These are the only rules that can be legally enforced by a court of law. In other words, if the provider refuses to provide care on a particular day that is covered by the contract, the parent is not legally required to pay for that day. If the parent refuses to pay for care that is covered by the contract, the provider can go to court to enforce this rule.
All other rules established by the provider are not legally enforceable. These are defined as policies such as: authorized persons who can pick up children, illness and emergency policies, activities, meals, naps, toilet learning, discipline, etc. If a parent or provider is unhappy because the other person is not abiding by these policies, the solution is to end the agreement, not take the person to court. -
The method to terminate the contract. Usually providers will require parents to give them at least a two week written notice before the agreement can be terminated. We recommend that providers do not require the same notice for them to end the contract. Instead, providers should include this language: "Provider may terminate the contract at will." The reason why providers should do this is to allow themselves to immediately end the agreement if a parent becomes disruptive to their business (such as making a false complaint to licensing, bad mouthing to other parents, threat of violence, etc.).
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Signatures of the parent and provider. When both parents are caring for their child, providers should get both parents to sign their contract so that it can be enforced against either parent.
Make Sure Your Contract is Clear
Good communication is key in any relationship. It is particularly important when dealing with parents in your child care business. Providing clear information is important whether you are discussing what activities the children participated in that day or the rates that you charge.
When establishing a contract, terms can be established either verbally or in writing. The biggest disadvantage of a verbal contract is that the terms can be misunderstood. The legal disadvantages of a verbal contract are that it can terminated immediately by either party and that all the parties must be in complete agreement at all times. These disadvantages make a verbal contract very difficult to work with and enforce.
When the terms of the contract are written, the chances of misunderstanding are much less. Your expectations can be clearly written, such as pick-up times. A written contract can also explain any consequences of violating any terms, such as late fees. This creates a document that can then be referred to if there are questions regarding any of the terms. Any change to a written contract must be in writing. You can add an addendum to the contract or write out a new one. In either case make sure the parent signs it. If a change to your written contract is not put in writing, it can't be enforced.
A written contract also gives you the opportunity to discuss how you run your child care business. This discussion can reduce misunderstandings as you can answer any questions or discuss any concerns about the terms immediately with the parents. The combination of the discussion and the written document will help reduce misunderstandings between you and parents.
Reduce Misunderstandings
Have you ever given a parent a break and not enforced your late fee or some other term of your contract? If so, you should include the following language in your contract:
Failure to enforce any term or provision in this contract does not invalidate that provision, term, or any other provision or term of this contract. If you want to begin to enforce the contract term immediately, write an addendum to your contract, with the following language, have the parents sign it, and give them a copy:
Effective immediately, all terms of the contract signed on _______ (fill in date contract signed) will be enforced as written.
Another contract tip ─ Consider the following language:
Fees incurred due to returned or nonpayment of checks will be the sole responsibility of the parents.
Add or edit the following language to fit with your situation:
Any additional costs due to returned checks will be due within 3 days of notice to you and are subject to late payment fees.
For all of the contract language cited above, if you want to add any of the statements to your contract you can either rewrite your contract or draft an addendum, have your parents date and sign it, make a copy for the parents, and keep the original with the contract.
If the parents are not living in the same house, but share child care expenses, be sure to go over your contract with both parents. Have both parents sign the contract. This will make it easier to enforce the terms with both parents. This is good practice even with parents who live in the same house. Even parents who are "happily married" split or just might disagree with the terms when it comes time to enforcing your contract.
This handout was produced by Think Small (www.thinksmall.org).
For Tom’s entire publications visit: NAFCC Store (NAFCC members receive a discount)
Tom Copeland This email address is being protected from spambots. You need JavaScript enabled to view it. Phone: 801-886-2322 (ex 321)
Facebook - http://www.facebook.com/tomcopelandblog
Blog - http://www.tomcopelandblog.com
"Become a member of the National Association for Family Child Care, (http://www.nafcc.org/) and receive monthly business e-newsletters, discounts on books by Tom Copeland, IRS audit help, and much more."
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The Basics of a Parent/Provider Agreement |
by Tom Copeland
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Family child care providers are generally free to construct their own contract with the parents of the children in their care. There are two exceptions: |
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1. |
Some state licensing rules define what should be in your contract, so check with your local licensor before finalizing your agreement. |
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| 2. | Federal anti-discrimination laws make it illegal for providers to discriminate in their contract on the basis of race, color, gender, religion, age, disability, or national origin. Your state or local government may add additional categories such as sexual orientation. | |
| Other than these limitations, providers can establish whatever rules they want in their contract. All contracts, however, should contain the following four clauses: | ||
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1. |
The names of the parties to the contract (the parent(s) and the provider), as well as the name(s) of the children. |
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2. |
The terms of the contract: the days and hours the provider is open and the parent fees for care. These are the only rules that can be legally enforced by a court of law. In other words, if the provider refuses to provide care on a particular day that is covered by the contract, the parent is not legally required to pay for that day. If the parent refuses to pay for care that is covered by the contract, the provider can go to court to enforce this rule. All other rules established by the provider are not legally enforceable. These are defined as policies such as: authorized persons who can pick up children, illness and emergency policies, activities, meals, naps, toilet learning, discipline, etc. If a parent or provider is unhappy because the other person is not abiding by these policies, the solution is to end the agreement, not take the person to court. |
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| 3. | The method to terminate the contract. Usually providers will require parents to give them at least a two week written notice before the agreement can be terminated. We recommend that providers do not require the same notice for them to end the contract. Instead, providers should include this language: "Provider may terminate the contract at will." The reason why providers should do this is to allow themselves to immediately end the agreement if a parent becomes disruptive to their business (such as making a false complaint to licensing, bad mouthing to other parents, threat of violence, etc.). | |
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4. |
Signatures of the parent and provider. When both parents are caring for their child, providers should get both parents to sign their contract so that it can be enforced against either parent. |
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This handout was produced by Think Small (www.thinksmall.org).
For Tom’s entire publications visit: NAFCC Store (NAFCC members receive a discount)
Tom Copeland This email address is being protected from spambots. You need JavaScript enabled to view it. Phone: 801-886-2322 (ex 321)
Facebook - http://www.facebook.com/tomcopelandblog
Blog - http://www.tomcopelandblog.com
"Become a member of the National Association for Family Child Care, (http://www.nafcc.org/) and receive monthly business e-newsletters, discounts on books by Tom Copeland, IRS audit help, and much more."
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Contract Versus Policies |
by Tom Copeland
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This handout was produced by Think Small (www.thinksmall.org).
For Tom’s entire publications visit: NAFCC Store (NAFCC members receive a discount)
Tom Copeland This email address is being protected from spambots. You need JavaScript enabled to view it. Phone: 801-886-2322 (ex 321)
Facebook - http://www.facebook.com/tomcopelandblog
Blog - http://www.tomcopelandblog.com
"Become a member of the National Association for Family Child Care, (http://www.nafcc.org/) and receive monthly business e-newsletters, discounts on books by Tom Copeland, IRS audit help, and much more."
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Contract Complications |
by Tom Copeland
The primary purpose of a contract is to communicate what is expected of both the parent and the provider. Do you have a contract? Does your contract address the following situations?
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The parent must give a two-week notice before terminating your services and must pay for this period whether or not the child is in attendance. It also states that the parent does not have to pay for a week of a provider's vacation. The parent gives her two-week termination notice on the Friday before the provider is to take her vacation. Must the parent pay for the next two weeks?
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There is a declared snow emergency. The parent does not bring her child to your business. Must the parent pay for this day? What if the provider told the parent not to bring her child because the provider was concerned about unsafe driving conditions? Should the parent pay for this day?
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There will be a two-week trial period during which time either the parent or provider can terminate without giving notice. The parent has paid for the last two weeks of care in advance. The provider terminates after the second day of care. Should the provider pay the parent back the two-week deposit?
There are no right or wrong answers to these situations. A provider can resolve them any way she sees fit in her contract. The following are some suggested ways to handle the above situations.
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The provider should not allow a parent to avoid paying for the last two weeks of care by giving notice before the provider takes her vacation. Add contract language that says that the parent must pay even if the provider is on vacation for any of the two-week notice period.
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Some provider contracts state that the provider will always be open, regardless of weather conditions and that parents must always pay. If a provider tells the parent not to drive, it is reasonable not to charge the parent for this day.
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If seems reasonable for the provider to refund the two-week deposit when the provider or the parent terminates during a trial period.
No contract can cover every single situation that may arise. Do your best to address as many situations as you can that involve payment. If something comes up later that you had not anticipated, be as reasonable as possible in how you handle it.
Here are some other situations that providers have called us about over the past year and how we answered them.
My contract requires parents to give me a paid two-week notice. It also says parents don't have to pay for the week-long vacation I take each summer. One parent gave me notice the Friday before I took my vacation. Does the parent owe me for two weeks or one week?
Unfortunately, your contract contradicts itself in this situation so you will probably have a difficult time enforcing your two-week paid notice in court. You could try to explain the contradiction to the parent and come up with a compromise. Under your contract the parent clearly owes you for a one-week notice. Maybe you can ask the parent to pay for two days of the second week. Make sure to rewrite your contract to say that parents must pay for the two weeks of their notice period even if you are on vacation during this time.
I gave a parent a three-week paid notice, under the terms of my contract. At that time I told the parent that they could leave early if they found care before this time was up, but we didn't put this in writing. Two days into the three weeks the parent found other care and wants to leave. Now I realize I don't want to lose so much money if I allow the parent to leave early. Can I enforce the three-week paid notice?
Yes. Any change to a written contract must be in writing for it to be enforced. So your verbal agreement isn't enforceable by the parent because it conflicts with your written contract. If the parent has not paid you for the three weeks, she may not be happy about paying now since you went back on your word. Enforcing your contract in court would not be a sure thing, even though you are legally in the right, because sometimes judges side with parents. Before you make a generous offer to allow the parent to leave at any time, make sure you are fine with the potential loss of money if the parent decides to leave immediately. In the future you should require the parent to pay for the last three weeks in advance. Then you are in the stronger position to refund some of the money or not.
I require parents to pay me when I take a two-week vacation. One parent gave notice two months before my vacation. The parent had been with me for six months. I was counting on this parent to contribute toward my vacation. Since the parent was with me for half a year, can I now charge her for half of their rate for these two weeks of vacation?
No. Since your contract doesn't allow you to charge for vacation time if the parent isn't there when you take the vacation, you can't do this. You can change your contract to say that parents must pay a prorated amount of your vacation time if they leave your program before you take your vacation each year. I would not require the parent to pay this prorated amount if you terminate the parent before your vacation. Another way to deal with this is to increase your rate so that it covers your vacation time and then the parent won't have to pay during those weeks.
One of my families has joint custody of their child after their divorce. The father is allowed to pick up the child on Thursday and Friday. He pays for these two days and the mother pays for Monday through Wednesday. Now the father wants his new girlfriend to pick up the child. The mother is very upset about this and doesn't want me to allow anyone but the father to pick up the child. I don't like being in the middle of this dispute. What should I do?
You are always in control of your business rules. You can tell parents that they both have to be in agreement about who is allowed to pick up the child each day, or you can say that each parent gets to decide who is allowed to pick up the child on their day. Since each parent is paying you separately it seems logical that each parent should get to decide who the backup person will be. In that case you would tell the mother that she doesn't have any say over what the father does. If the mother is unhappy about this her options are to try and change the mind of the father or terminate care.
What if the facts in this last situation were a little different? The mother paid for all the days, there was no separate contract with the father, and the father was asking the provider a lot of questions about the care of the child (hours the provider worked, paid holidays, and so on). The provider is concerned that the father is asking these questions to use them as ammunition against the mother. Does the provider have to answer these questions?
No. Your business relationship is with the mother, not the father. Since the father has no contract with you, you are under no obligation to answer any questions. You can answer general questions about your rules, but since you know this might create problems for one of your clients, it's not a good idea to do so. Tell the father that he should ask the mother if he wants to know anything about your business.
This handout was produced by Think Small (www.thinksmall.org).
For Tom’s entire publications visit: NAFCC Store (NAFCC members receive a discount)
Tom Copeland This email address is being protected from spambots. You need JavaScript enabled to view it. Phone: 801-886-2322 (ex 321)
Facebook - http://www.facebook.com/tomcopelandblog
Blog - http://www.tomcopelandblog.com
"Become a member of the National Association for Family Child Care, (http://www.nafcc.org/) and receive monthly business e-newsletters, discounts on books by Tom Copeland, IRS audit help, and much more."
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Early Drop-Off and Late Pick-Up |
by Tom Copeland
Providers work very long hours caring for children. A national survey indicates that they care for children an average of eleven hours a day, or fifty-five hours a week. When you are working so many hours it can be very frustrating when clients drop off their children early or are late to pick them up. Providers around the country have come up with many different solutions to this problem.
First, it's important that your contract states that your regular fee covers a specific time during the day so it is clear if a client is early or late. Usually the most common way that providers deal with these situations is to charge a late fee (or early fee). It makes sense that you would charge for all the time that you are working. Often providers give parents a ten or fifteen-minute grace period at pick-up time before the late fee applies. Some providers have no grace period at all. One provider's contract says that if a client is ever late to pick up her child she is immediately terminated! When asked, she said that no client had ever been late. Most providers would not take such a drastic step.
Here are some examples of a late fee or other consequence when parents drop off early or pick up late:
- Client will pay $0.50/$1.00 per minute if child is dropped off earlier than scheduled or picked up later than scheduled.
- Client who notifies me of early drop off the night before will not have to pay an early drop off fee.
- Client who notifies me of a late pick up at least an hour before the scheduled pick up time will not have to pay a late pick up fee.
- Client will be allowed to drop off early or pick up late ____ times a year without charge. For all additional early drop offs or late pick ups there will be a fee of $____ per minute.
- Client will be allowed to drop off early or pick up late ____ times a year without charge. If there are any additional early drop offs or late pick-ups our agreement will end.
- Provider is willing to provide care after the regular pick up time. The rate after the regular pick up time is $____ per minute.
- Fees for early drop off or late pick up are due at the end of the day.
Time versus Money
Even with a late fee in their contract, many providers feel uncomfortable with enforcing this rule. To resolve some of the conflict surrounding this issue I strongly urge providers to answer this question: What is more important to you—time or money? If time is more important to you and your regular hours end at 6:00 p.m., this means you don't want to work after then no matter how much a client is willing to pay you. You want the time to spend with your family or for yourself. If this is the case, you need to set a high consequence for the client to stop the behavior.
That could mean charging $1 a minute or more for a late pick up. One provider complained that a client kept showing up late even though her late fee was $50 a half hour! Since the client didn't hesitate to pay the late fee the provider needs to raise it even more to change the behavior.
If money is more important to you, this means you would be willing to work after 6:00pm if the amount of money was right. If this is the case, you want to set your late fee low enough so that enough clients will be late and you can earn some extra money. A $1 a minute late fee is $60 an hour and many clients may not be willing to pay this. If you lowered your late fee to $0.50 a minute ($30 an hour) you may find more clients feeling like they can afford to be late.
One provider told me of a different kind of solution she came up with to address this problem. She did not like having a late fee because it was associated with guilt and blame, and it created tension between her and her clients. Instead she said that after her regular pick up time she had an "evening rate" which was higher than her regular rate. She said that by calling this an evening rate rather than a late fee it reduced the stress for both her and her clients. Obviously this provider considered money more important than time so this solution worked for her.
This handout was produced by Think Small (www.thinksmall.org).
For Tom’s entire publications visit: NAFCC Store (NAFCC members receive a discount)
Tom Copeland This email address is being protected from spambots. You need JavaScript enabled to view it. Phone: 801-886-2322 (ex 321)
Facebook - http://www.facebook.com/tomcopelandblog
Blog - http://www.tomcopelandblog.com
"Become a member of the National Association for Family Child Care, (http://www.nafcc.org/) and receive monthly business e-newsletters, discounts on books by Tom Copeland, IRS audit help, and much more."
