A good on-site manager is critical to your property's success. They may show units to prospective tenants, collect rent, or perform routine maintenance. They may do all these things. While duties may vary, your on-site manager is the face of your building, and provides a crucial value. This value is often repaid in informal ways: cash, a yearly bonus, or most common, rent credit. These informal agreements often leave you, the employer, vulnerable to a wage-claim suit.
You (Probably) Have to Hire an On-Site Manager
In California, and many other states, you must hire an on-site manager if you exceed a certain number of units. In California that number is 16. Even if you have fewer than 16 units, the value provided by a good on-site manager may justify the expense.
25 CCR § 42. Caretaker.
A manager, janitor, housekeeper, or other responsible person shall reside upon the premises and shall have charge of every apartment house in which there are 16 or more apartments, and of every hotel in which there are 12 or more guest rooms, in the event that the owner of an apartment house or hotel does not reside upon said premises. Only one caretaker would be required for all structures under one ownership and on one contiguous parcel of land. If the owner does not reside upon the premises of any apartment house in which there are more than four but less than 16 apartments, a notice stating the owner's name and address, or the name and address of the owner's agent in charge of the apartment house, shall be posted in a conspicuous place on the premises.
California limits in how much of an employee's pay can be in the form of rent compensation. California’s Industrial Welfare Commission's Order No. 5-2001 categorizes on-Site managers as part of the Public Housekeeping Industry.
INDUSTRIAL WELFARE COMMISSION ORDER NO. 5-2001 REGULATING WAGES, HOURS AND WORKING CONDITIONS IN THE PUBLIC HOUSEKEEPING INDUSTRY
(P) "Public Housekeeping Industry" means any industry, business, or establishment which provides meals, housing, or maintenance services whether operated as a primary business or when incidental to other operations in an establishment not covered by an industry order of the Commission, and includes, but is not limited to the following:
(3) Hotels, motels, apartment houses, rooming houses, camps, clubs, trailer parks, office or loft buildings, and similar establishments offering rental of living, business, or commercial quarters;
Order No. 5-2001 also contains the terms for lodging compensation in this industry:
10. Meals and Lodging
(B)"Lodging" means living accommodations available to the employee for full-time occupancy which are adequate, decent, and sanitary according to usual and customary standards. Employees shall not be required to share a bed.
(C) Meals or lodging may not be credited against the minimum wage without a voluntary written agreement between the employer and the employee. When credit for meals or lodging is used to meet part of the employer's minimum wage obligation, the amounts so credited may not be more than the following:
Effective Dates: January 1, 2001 January 1, 2002
Rooms occupied alone $29.40 per week $31.75 per week
Room shared $24.25 per week $26.20 per week
two-thirds (2/3) of the ordinary rental value, and in no event more than$352.95 per month$381.20 per monthWhere a couple are both employed by the employer, two-thirds (2/3) of the ordinary rental value, and in no event more than$522.10 per month$563.90 per month
(E) If, as a condition of employment, the employee must live at the place of employment or occupy quarters owned or under the control of the employer, then the employer may not charge rent in excess of the values listed herein.
Brock v Carrion - An Example Case
James Brock was the resident manager for a 22-unit apartment building owned by Carrion, LTD. For two years, he performed maintenance, collected rent and showed vacant units. Brock and Carrion had entered into an informal agreement. Carrion would pay Brock $550 per month as manager, and his apartment would be rented to him at the same rate. Brock was not actually paid the $550, but was simply not asked to pay the rent for his unit. Brock filed suit, alleging that Carrion did not meet their minimum wage requirements. Carrion, the suit alleged, had offset all his wages by the value of the apartment, and not just the minimum wage.
Specifically, plaintiff seeks damages, in the form of allegedly unpaid minimum wages and overtime wages, for his work as a resident apartment manager at defendants' apartment complex.
This matter comes before the court on cross-motions for summary adjudication by plaintiff and defendants. All parties seek resolution of a single issue: whether defendants are legally entitled to claim an offset or credit, against wages potentially owed to plaintiff, for all or part of the value of the apartment in which plaintiff resided during his employment as apartment manager.
Plaintiff did not receive any compensation for completing his regular managerial tasks; he was simply not asked to pay for the apartment in which he resided. (UMF No. 19.) In fact, defendant never paid plaintiff the $550.00 per month income stipulated in the Employment Agreement, nor did plaintiff ever pay defendant the $550.00 per month as rent for his apartment. (UMF Nos. 15 & 16.) In addition, defendants have "never ... provided [plaintiff] with a `pay check stub' or any other documentation showing his compensation, and any deductions therefrom, etc[.], for his work as the apartment manager." (UMF No. 20.) Defendants only provided plaintiff with "pay check stubs" for his $15.00/hr work above and beyond his managerial responsibilities. (UMF No. 21.) Defendants do not possess any time cards or other materials recording plaintiff's hours worked, compensation, and deductions, for his apartment manager duties. (UMF No. 22.) Defendants have not produced, nor do they have in their possession, any documents demonstrating the actual cost of furnishing the apartment to plaintiff. (UMF No. 24.; Defs.' Reply Add'l. UMF No. 30.)
Because defendants violated Wage Order No. 5 by improperly crediting the apartment's value against minimum wages, state law precludes defendants from claiming an offset to recoup this value from plaintiff's potential damages.
Full Summary via Courtlistener
The court found in favor of Brock, largely because Carrion could not produce any documentation related to Brock’s employment: no pay-stubs, no time-sheets, no “voluntary written agreements”.
What to do?
Make sure on-site managers fill and file time-sheets detailing the work they performed.
Have a “voluntary written agreement”. Use it to clarify the terms of compensation, particularly the terms of any lodging value.
Buy Workers Compensation insurance, and make sure it covers your manager.
Make payment as regular as possible, including:
Pay managers on time, and on a defined schedule.
Make proper payroll deductions.
Keep employment records for at least 3 years.
Be wary of boilerplate forms and contracts. They may be out-of-date, or contain other inaccuracies.