on-site manager compensation

January 1, 2016 by Patsy Chan | 21 Comments

2016 new Law for Los Angeles

On January 1, 2016, California minimum wage increased from $9.00 to $10.00 per hour. The minimum wage for resident managers who reside in apartment buildings in city of Los Angeles increases from $10.00 to $10.50 per hour on July 1, 2016 if the employer employs 26 or more employees.

If the employer employs less than 26, then the $10.50 increase will be effective July 1, 2017.

(if a city has a way requirement higher than California minimum wage, the more stringent ordinance prevail).

The maximum allowable rent offset from wages owned in exchange for reduced or free rent is $564.81(single)/$835.49(couple)per month.

California Industrial Welfare Commission (IWC), and State Legislaure, regulate wage and hour laws for resident managers. IWC authorizes substantial sanctions against an owner who does not pay the manager the proper minimum wage.

One of the most oppressive penalties is that if the owner or management company does not obtain the manager’s signature on a properly drafted agreement, the reduced or free rent the owner or management company gave the manager may not be credited against the wages the manager otherwise earned during the Statue of Limitations periods of the preceding three or four years.

Therefore, the employer will then have to write a check to the manager for what ma amount to tens of thousands of dollars for back wages, plus penalties. No insurance will cover that obligation.

Landlord may reduce the monthly wages owed by either 2/3 the ordinary rent value of the unit or $564.81 per month; whichever is less. Which means: the maximum rent which can be charged to is required to reside on complex is $564.81 (single)/$835.49 (couple).

Example: Single person as resident manager

Rent = $1,200 (2/3 = $800 which is more than $564.81)

Resident manager work 60 hours per month at $10/hour = $600

$600 – $564.81 = $35.19 Landlord to pay resident manager.

Example: couple as resident manager

Rent = $1,800 (2/3 = $1,200 which is more than $835.49)

Couple work 60 hours per month at $10/hour = $600

$600 – $835.49 = no payment due to manager.

**the minimum wage offset only apply unless a legally sound agreement is voluntarily signed by the manager**

“on-call” “waiting-time” “stand-by time”:

California court of appeal disposed of that argument in Isner v. Falkererg by holding that the owner or management company need only pay the manager of the “time spent carrying out assigned duties.”

Therefore, hours spent sleeping, cooking, eating, talking with friends on the phone, watching television, playing computer games and engaging in other personal activities are not compensable even though the manager may be “waiting” for a repairman to arrive or sitting around all day during an “open house” to exhibit a vacant unit to prospective tenants.

Court decided, an owner or management company does not need to pay a resident manager who is required to live on site for “on call”, “stand by” or “waiting” time if the Manager is not actively working.

However, the time manager spends, for example, overseeing the repairman or actually showing a vacancy o potential applicants is compensable because the manager is actually working.

Maximum Rent Qualifications – 16 units or more

An apartment building consists of 16 rental units or more, the landlord is required to have a “responsible person” residing on premises who is “in charge of the apartment building”. Usually that person is a manager, but he or she could also be a caretaker or janitor. Regardless of the title given, person’s benefits from the same wage, hour and rent laws applicable to a manager.

Check Exchange Exception:

Under the Labor Code a Landlord may charge up to 2/3 of the ordinary rental value of the unit without regard to the limitations ($564.82 or $835.49) provided that separate checks for the minimum wage payment and the rent are exchanged between the Landlord and the manager.

In order to take advantage of this exception, the Landlord must pay the manager the full minimum wage per hour for hours worked by one check and the manager must pay the Landlord rent in an amout not more then 2/3 the ordinary rental value by a separate check.

Under this agreement, the Landlord is not permitted to off-set the minimum wage he owes by the rent due from the manager. The theory is that payments for labor are absolutely required regardless of whether the manager pays the agreed rent.

Rent control buildings

There are multitude of rules and limitations concerning rental increases of apartment managers residing in rent controlled units. Please referral to http://hcidla.lacity.org/resident-managers-tenants.

Case study: Von Nothdurft v. Steck

Sick Leave “The Healthy Workplaces, Healthy Families Act of 2014.”

Beginning July 1, 2015, employee who works in California for 30 days or more per year with get paid sick days. Such sick days will accrue at a rate of no less than one hour for every thirty hours worked. When you have worked for 90 hours out of the year, you will have accrue three hours of paid sick leave. This entitled employee to use accrued paid sick days starting on your 91st day of employment.

Employer is not required to provide paid sick leave to employee for unused sick days after termination, resignation, retirement or other separation from employment. However, if the separated employee is rehired by the employer within one year from the date of separation, previously accrued but unused sick days are automatically reinstated.

Sick leave are paid out at the employee’s hourly wage.

Accrued but unused paid sick days carry over to the following year of employment.

Employer limits employee’s use of paid sick days to 24 hours or 3 days in each year of employment.

No hassle. One simple solution.

Do you have an updated signed properly prepared legal agreement with your on-site manager?

Do you have complete clear recorded documentation of hours worked?

Did you post manager’s name, address, hours in a conspicuous place at the building?