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[quote=Anonymous]The costs of furnishing items to employees that are primarily for the benefit or convenience of the employer are not recognized as “reasonable.” They can never qualify as “section 3(m) facilities” and may not, therefore, be counted as a part of wages statutorily due. Consequently, if an employee returns to the employer (or to someone else on the employer’s behalf) any part of his or her wage entitlements due (whether returned in cash or in other than cash — e.g., tools or equipment), violations result. Violations occur in two ways: (1) directly, when an employer deducts from an employee’s pay the cost of furnishing the employee a non-3(m) item; or (2) indirectly, when the employee must incur out-of-pocket expenses to buy the item and the employer fails to reimburse the employee for the outlay. See Regulations, 29 CFR §§531.3(d)(1) and (3), 531.32(c), and 531.35.
http://www.dol.gov/whd/opinion/FLSA/2001/2001_02_16_7_FLSA.htm

If the nanny is living in due to *employer's* needs/desire (surgeon frequently on call, shift work that would mean nanny would need to be there too early or late to find someone adequate that would take the hours, etc.)

Q. How will this effect live-in care givers who receive room and board as part of their compensation?
A. The FLSA allows an employer to count as part of wages the reasonable cost or fair value of furnishing an employee with board, lodging, or other facilities under certain circumstances. Specifically, employers may only count the reasonable cost or fair value of lodging as part of their minimum wage obligation to live-in domestic service employees if:

1) Employees voluntarily accept the lodging; 
2) Lodging is furnished in compliance with any applicable federal, state, or local law; 
3) Lodging is primarily for the benefit of the employee; 
4) Employers maintain accurate records of costs incurred in furnishing the lodging; and 
5) The credit claimed does not exceed the reasonable cost or fair value of the lodging furnished.
http://www.dol.gov/whd/homecare/qa.htm#livein3

Wages.   Figure federal income tax withholding on both cash and noncash wages you pay. Measure wages you pay in any form other than cash by the fair market value of the noncash item.
  Do not count as wages any of the following items.
Meals provided to your employee at your home for your convenience.
Lodging provided to your employee at your home for your convenience and as a condition of employment.
http://www.irs.gov/publications/p926/ar02.html

I knew I had it somewhere, just took me a few minutes to find it.[/quote]

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