"Can I Charge Different Rates to Parents?" and Other Contract Questions Answered

Q: May I charge different rates to different parents when some parents are on the subsidy program?

A: Maybe. Let’s say your private pay fee is $180 a week. Let’s say your state subsidy program will pay you $150 a week for a subsidized parent. Most states will allow you to charge the parent the $30 a week difference. A few states prohibit this. You need to find out what your state law says.

Q: Can I charge advance payments for parents on the subsidy program?

A: It depends on your state rules.

Q: What deposit or advance payment policies would you suggest for subsidy families?

A: If your state allows it, I would recommend having subsidy families pay at least one week of copay in advance and two weeks of copay for the last two weeks of care. This may be difficult, if not impossible, for many subsidy families.

Q: If I have different rates for different parents, based on different things, do I need to put in writing these individualized policies?

A: It’s not a requirement that you do so. You should assume, however, that all parents will find out what other parents are being charged. If you don’t have your rates in writing you may create more confusion than necessary. I would put your individual rates in writing for each parent so you can enforce your contract. I would not put in writing the reason for the rate (family income, spouse in hospital, newly enrolled family, or other special circumstances).

Q: What is the best way to recover payments that are due when a child leaves? Letters to parents usually haven’t worked. Should we go to small claims court?

A: If a “demand letter” to the parent doesn’t work, then, yes, take them to small claims court! Too many child care providers allow parents to leave their program owing money and do nothing about it. Your demand letter should be short: “According to our contract you owe $_____. If you do not pay or make arrangements to pay by _________ (date of deadline) I will have no alternative but to take you to court where I will sue you for $______, plus court costs.” The only way to avoid this situation entirely is to require private pay parents to pay you at least a week in advance and to pay for their last two weeks in advance. If a parent can’t afford this, you can require them to pay you a little extra each week until you have this money in hand.

Q: How expensive it is for a provider to take a parent to court to collect unpaid fees?

A: It depends on your local small claims court. Usually, it would be less than $50, but it can vary. Add this fee onto the amount for which you are suing the parent.

Q: I had a parent get mad at me for charging them a late fee because they say when they pick up early they should be credited with the minutes when they are late.

A: Although this may sound logical to the parent, you answer should be, “That’s not how my rules work. You owe me a late fee, regardless of how often you pick up early. That’s my rule.” Sometimes child caregivers feel the need to justify or explain their rules in detail, hoping that the parent will come to agree with them. No. You can give a brief explanation of your rules, but in the end, they are your rules and parents must follow them.

Q: Is it legal to charge some parents and allow some others to receive free care based on their ability to pay?

A: Yes, in general. If you are caring for subsidized families, you must follow their rules. However, with private pay parents you can set up your own sliding fee or discount program and charge more to parents who make more and less (or nothing!) to parents who make less. Let’s say you decide to provide free care for six months to a family that is suffering a major financial setback. If another family comes to you and says they also are suffering financially and want free care, are you required to give this family free care? No. You can always limit your discount/free care policy to one family and you can change your policy at any time.

Q: Is there a set amount that can be charged for returned checks? Can a provider charge more than the bank charges for returned checks?

A: Yes, you can charge parents who bounce a check more than the bank charges you. There may be a limit on how much you can charge. Check with your state consumer protection agency. If you are going to charge a fee (which I recommend), you should put a notice of this in your contract.

Q: If I am going on vacation and parents want to stop service and do not want to pay my vacation fee, what should be in the contract so I cannot lose my money?

A: You can raise your rates enough to cover payment for your vacation, so the parent won’t be paying you during your vacation. You can put in your contract that payment for the vacation is due whether or not the parent is in care at the time of the vacation, but that will be difficult to enforce. You can require parents to give you a longer notice when they are leaving (one month) so they are less likely to leave immediately before your vacation.

Q: How should I deal with suddenly enforcing my rules if I haven’t been doing it for a long time?

A: Simply announce what you are going to do. You can say to parents, “I know I haven’t been enforcing all of my rules consistently up until now. But, starting this month I will begin enforcing all of my rules, particularly __________________________. If you have any questions about this, let me know.”

These questions were asked of me during a recent webinar I did sponsored by the Early Childhood Investigations Webinars.

Tom Copeland - www.tomcopelandblog.com

For more information, see my book Family Child Care Contracts & Policies.