Does the Provider Owe a Parent a Refund?

I got a call this week from a family child care provider who announced to her parents on June 1st that she will be closing down at the end of the day on June 19th.

Each parent had paid a two-week "deposit" to initially hold the spot for the child and to pay for the last two weeks of care.

One parent does not want to bring her child for the last week of care and wants a refund for that week. The parent is arguing that because she paid a "deposit" she should get her money back when she doesn't receive child care services.

Does the provider owe the parent a refund?

No. As long as the provider is willing to provide care under the contract, she does not owe the parent a refund. If the provider immediately terminated the parent she should refund any monies paid by the parent for care she was unwilling to offer.

In this case it's the parent who doesn't want to bring her child to care. Since the contract says that the parent must pay for care, even when the child does not attend, the parent has no legal case.

This situation illustrates the problem with using the word "deposit" in your contract. Some parents will assume that the use of this word somehow means they can get their money back. Even when providers use the phrase "non-refundable deposit" it still doesn't stop some parents from complaining.

Therefore, use the following language: "Parent will pay a $____ non-refundable holding fee." If you are receiving money from parents that will apply to the last weeks of care: "Parent payment will be applied to the last _____ weeks of care. Payment will not be refunded if parent does not bring child to care for these _____ weeks."

A side note

In this situation the provider also had in her contract that she could take 12 personal days during the year. When she took a personal day she would credit parents with a free day during the next pay period. At the time she gave her notice to parents, she had taken 14 personal days.

Since the parent who left early wouldn't be able to get these two credited days of free care, I told the provider to refund this parent for the amount she paid for two days.

If a provider is not willing (or able) to provide care for which the parent has paid, the provider should always refund monies paid for these days.

Have you run into similar problems with parents?

Tom Copeland - www.tomcopelandblog.com

Image credit: https://www.flickr.com/photos/fortrucker/5555939590

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