Questions and Answers About Contracts & Policies

Should I use a trial period for a parent on the subsidy program?Should I have a lawyer review my contract?I have parents that owe me money. How do I go about changing this and get them caught up?

These are some of the questions asked by child care providers that I answered during a recent webinar “How to Effectively Use Contracts and Policies with Parents” sponsored by Child Care Resource and Referral of NW Iowa.

Here are my answers

Q: Should I use a trial period for a parent on the subsidy program?

A: Yes. It's appropriate to have a trial period for all families. A trial period is a day-by-day agreement that usually lasts one or two weeks where either the parent or provider can end the contract at the end of the day.

Q: Should I have a lawyer review my contract?

A: It's not necessary, but you can do this if you want. Your contract can be very basic and should contain the following four elements: 1) Names of the parties, 2) Terms (hours and payment), 3) Termination arrangement, and 4) Signatures.

Q: I have parents that owe me money. How do I go about changing this and get them caught up?

A: It's up to you to enforce your contract. If you have been lax about collecting money from parents on time, here are some suggestions: Give all parents a notice that says you will immediately start enforcing your contract regarding payments. Tell parents that if they don't pay on-time going forward, there will be a late payment fee. (If you don't have this in your contract, add it now.) Then tell parents who are behind in their payments that you will set up a repayment plan with them within the next ten days. If the parent does not sign the repayment plan, or fail to follow the terms of the repayment, it will be grounds for you terminating the contract.

Q: Are we required to give parents a two-week notice to terminate care?

A: No. Most providers across the country require parents to give a two-week notice. Some require a longer notice. Many providers' contracts require them to give parents a two-week notice as well. My strong recommendation is to not require yourself to give parents any notice. Put in your contract, "Provider may terminate at will." This gives you the opportunity to protect yourself if a child or parent is out of control or you or your business is threatened in any way.

Q: Does a contract have to be renewed each year? Once the child is enrolled, is the contract enforced until they leave my program?

A: I recommend that providers have a start date in their contract, such as "________ (date) will be ___________ (name of child) first day in care." Don't add an ending date because it can hurt you, but not help you. If you have an ending date and the parent doesn't sign a new contract before the ending date, the old contract is no longer enforceable. You can renew your contract each year if you want. Without an ending date, the contract is valid for as long as the child is in your program.

Q: How do I change my contract or policies?

A: To change a contract it must be in writing and signed by both parties. You can do this in one of three ways: 1) Cross out old language in the contract and enter new language. You and the parent(s) should initial the changes. 2) Type out a new paragraph to add or replace an existing paragraph and both parties initial the new paragraph. 3) Make changes in the contract, reprint the entire contract and both parents sign it. Whenever you redo any part of your contract, give the parents a copy.To change policies that are in a separate document from your contract, you don't need to have the parents sign the changes. Policies are your rules you can change at any time. Give a copy of the new or changed policies to parents. It can be useful to have parents sign or initial the new policies to improve communication with parents and to remind parents later that they knew about the change.

Q: Is the holding fee the same as an application fee?

A: A fee charged to put parents on a waiting list is different than a holding fee in which you promise to hold a spot for a parent for a specific date. I recommend charging parents a non-refundable holding fee if you are promising to hold a spot open for a parent in the future. Money received as a holding fee shouldn't be applied to child care later, in my opinion. Since you are potentially turning down other families, you should be paid for this potential loss of income.

Q: Can I raise my rates for new families, but keep the lower rate for previously enrolled families?

A: Yes! This is not illegal discrimination.

Q: If I terminate a family can they sue me for wrongful termination?

A: If you follow the process in your contract, then the parent will not win in any lawsuit against you. So, if your contract says you must give parents a two-week notice, and you do, then you can't be sued. If your contract says, you may terminate "at will" then there is nothing the parent can do about it.

Q: If my program has to close because of influenza or I become ill, can I still charge parents for these days?

A: It depends on what your contract says. If it is clear that parents must pay for such days, then you can. If it's not clear, then I wouldn't try to charge parents for such days.

A: I have a waiting list. Can I favor one family over the other, or must I admit parents on a first come first served basis?

A: As long as you are not discriminating based on race, sex, religion, ethnic background, national origin or disability, you can favor one family over another. (Note: some states make it illegal to discriminate based on sexual orientation or marital status or subsidy parents.) For example, if a relative approaches you for care, you can move them to the top of the wait list. Or, your college friend needs care.

Q: Can I assess a late pick up fee for one parent even though I'm staying open later for another family?

A: Yes! You should establish individual contracts/policies with parents. They can vary from one parent to the other. So, one parent's pick up time is 5pm and the rest of the parents pick up at 6pm. When you have different rules for different parents you should assume that everyone will find out what you are doing. As long as you have some reasonable explanation for your rules (getting tired at the end of the day, etc.) then you shouldn't have any problems.

Tom Copeland – www.tomcopelandblog.com

Image credit: https://www.dreamstime.com/q-icon-blue-questions-answers-symbol-icons-isolated-white-background-three-dimensional-rendering-d-illustration-image230397480

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