Charging Extra Fees

April 2003
by Mari Millard

Recently RNI received a call from a provider who had just taken a parent to small claims court. The provider had charged a late payment fee in addition to the weekly fee and it continued to accumulate interest throughout the court process. By the end of the court process the late payment fees totaled more than the original weekly fees owed by the parent. The judge concluded that the parent needed to pay the provider for the care that she provided. However, the judge ruled that the parents did not have to pay the late payment fees because they were excessive.

States have different rules as to the maximum amount of interest and late fees that can be charged to a client. For example, in Minnesota, common law has determined that late fees or interest do not fall under the limitations of state usury law because the late fees or interest are not considered a loan, but rather payment for a provider's service. It is possible for the client to take legal action and the judge could rule that these amounts are possibly excessive.

For most providers, charging parents different fees will not be seen as excessive. In fact, it's a good way to enforce a provider's rules. Parents will generally respond more favorably to a rule if there is a financial consequence for not complying. Many providers charge late payment and late pickup fees. These are not the only fees that can be charged. Some providers charge a fee if the parent doesn't provide a change of clean clothes or diapers after the provider has run out. This might be the time for you to review your contracts and policies and see if you are enforcing your own rules. Some providers have these fees clearly stated in their contracts but fail to enforce or collect them from parents. Perhaps there are some changes that you can make to your contract or enforcement procedures that will increase the likelihood of parents following your rules.