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Real Property Management: On-site Manager Compensation

2016 new Law for Los Angeles tenant_moveout_6

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 Legislature 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.

A 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 the 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” “standby 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, a 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 amount not more than 2/3 the ordinary rental value by a separate check.

Under this agreement, the Landlord is not permitted to offset the minimum wage he owes by the rent due to 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 a multitude of rules and limitations concerning rental increases of apartment managers residing in rent-controlled units. Please referral to https://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 getting 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 accrued three hours of paid sick leave. This entitled employee to use accrued paid sick days starting on your 91st day of employment.

The employer is not required to provide paid sick leave to an 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 is 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.

 

rsz_1rsz_4fairmate_managemen_sign(1) 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 the manager’s name, address, hours in a conspicuous place at the building?

 

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

  1. Kai says:

    My gf and Are the onsite property managers of a 19 unit complex/6 units are vacation rentals in summer, are we required to work a specific amount of hours or do the vacation rentals ? We feel she is using us to kill two birds with one stone essentially..

    1. Patsy Chan says:

      I understand your feeling, job responsibility is not task defined, there for the phase “duty as needed and assigned”.
      I suggest you find a diplomatic way to express what your employer can do to help you better achieve your employer’s goals.

  2. Kamlesh says:

    Under which labor code , check exchange exception can apply for resident manager of 16 units building, in California ,where a landlord can charge 2/3 of the market rent and pay the manager for the hours worked during the month?

    1. Patsy Chan says:

      There are many articles published by Apartment Owners Association. specifically: Minimum Wage Order No. 5 and MV-2014.
      or you can read about the explanation at http://www.aoausa.com/magazine/?p=2168. Hope this helps.

  3. John Smith says:

    I have a question I cannot seem to get answered.

    What about the time spent being on the phone with Vendors to schedule appointments, the time spent on the phone texting or calling tenants to schedule maintenance repairs in their unit? The time spent filling out a pile of paperwork for the office to process? The time spent watering the plants or sweeping the premises? The time spent driving to Home Depot and buying supplies, fixtures, appliances, etc.?

    Am I supposed to be logging this time in because my bosses want me to record that I work 48 hours a month when in reality I work nearly triple that when I add up all those other duties that are not showing a vacancy or accompanying a repairman.

    1. Patsy Chan says:

      Hello John,
      Of cause you have to record all hours you put in for working. it should be paid.
      A suggestion that might improve your productivity – a page from McDonald’s operations Manuel – set up regular schedules; set up regular vendors; organize your work station. these seems to be small things, but repetition make a big difference.
      I was trained to put things where they belong, and can go in to a refrigerator for 5 seconds and memories what I need to order over 50 items.
      So you see, is not the amount of work, is how we can improve our productivity.
      Hope this is helpful.

  4. Hi my name is Gaby
    My question to u is if the property management is paying me $10 an hour and lodging credit is taken from each pay check and its 30 hrs biweekly and if I get sick or something happens I still have to pay the 2/3 of rent can that happen then why lodging???

  5. James C Corn says:

    Managers take time to fact check what you read here or anywhere against what is at the IWC’s government website. Note: They just said that they suggest you read an article about those rules being published by the apartment owners association site which is not likely to have your best interests in consideration by any means. Then a quote from the MCDONALD’S manual. Of all companies to reference. It is humorously honest though. Just put a friendly tone and appearance for those whom do not pay close attention. They believe they are smarter in general (even with more errors on this page than I have made just now) just because we may not be as familiar with speaking with a forked tongue as they. These types of persons are used to twisting and manipulating the contexts of everything they are a party to. Regarding this practice of constant deception and deliberate misleading whomever they can at all times as just business, savvy, successful tactics, common amongst the succesful or shrewd. That is the gibberish of the old , unliked, unhappy, hateful, greedy and socially inadequate , bitter, misfits that throw fits of tantrum when they are on the receiving end of such practices instantly. Just a heads up to the average hard working man/woman.
    God bless!

  6. Alex says:

    I am an RM currently being paid $10+ an hour and paying full rent (2950) in a 16 unit building.

    I worked 65 hours last month.

    Should I be paying less?

    1. Patsy Chan says:

      Unfortunately, in California, 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, sick pay hours and rent laws applicable to a manager.

  7. Scott says:

    Hello, My wife and I never signed a manager agreement well over a decade ago. My question is, how will our compensation change in the future? More or less? We are scheduled to go over labor laws this week! Current rent for a unit is $1645 ($800 is considered lodging) $1740 is our monthly compensation. My wife works from 8am until 8pm 7 days a week. I am only in a support role as the husband and the paychecks are in her name. On another note, my wife is paying Federal and State taxes on our lodging/apartment because it is part of her paycheck. That cant be right! Help

    1. Patsy Chan says:

      When ever there is a dispute – different points of view, approach the difference head-on, discuss your points of view with your employer. Find a common ground to resolve issues, would be the ideal solution.

  8. Lily says:

    I just purchase 16 units apartments in California, the on-site manager get the free rent plus salary and her phone and Internet bills. I would like to fire her because I couldn’t effort all of those. Do I have a right to fire her? Do I have to give her notice? If I have to, how many days?

  9. Lety says:

    Hello,

    Q1: Specifically, which law is it that increased the min wage for Res. Managers from $10 to $10.50 as of July, 2016?

    Q2: What are the maximum allowable rent offset from wages for 2017? I have looked high and low for the new 2017 rates without any sucess ; I understand they are currently $564.81(single)/$835.49(couple)per month.

    Thank you

    1. Patsy Chan says:

      Thank you for your questions. The following are for reference information only, not intended to be legal advice of any kind.

      General rule for 2017: Owner or Management Company must obtain manager’s signature on a properly drafted agreement.For specific rules & regulations please consult your employment attorney.
      1, CA state wide minimum wage is $10.00 /hour (company with 25 or less employees) $10.50 / hour (company with 26 or more employees)
      Certain cities (e.g. San Francisco & Oakland ) have even higher minimum wages.
      2, Minimum wage for resident managers living in the city of Los Angeles will be $10.50 / hour till June 2017.
      (company with 25 or less employees) July 1st 2017 will increase to $10.50/hour
      (company with 26 or more employees) July 1st 2017 will increase to $12.00/hour
      3, Maximum allowable rent reduction offset that can be applied against wages owed based on reduced or free rent is $564.81 ($835.49) per month for employer has less than 25 or less employees.
      4, Maximum RENT can be charged to a manager whose residence in the complex is required as a condition of employment is %564.81 ($835.49) per month for employer has less than 25 or less employees.

      The California Industrial Welfare Commission (IWC) and the State Legislature regulate wage & hour laws for resident managers.

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  11. My husband and I live in a 300 unit mobile home park. I work in the office and my husband has the title of Manager. We have maintenance crew of 4 people and weekends off. We have always had our rent paid by the community. The new Management now wants us to pay for the entire rent $1,200. They are taking the rent off from our pay checks. When questioned about this they said that this is a new rule in California. The community is very upset about this and does not want us to pay for rent at all. Can the HOA vote on this to overturn the Management Company? Please advise.

    1. Patsy Chan says:

      thank you for your question. This looks like a question to be answered after review of HOA CC&R, employment agreement and other State regulations. Please referral to Legal council for your protection.

  12. Autumn says:

    If you have your onsite rent deducted from your pay and it happens to be a month with 3 paychecks are they allowed to deduct rent 3 times that month?

    1. Patsy Chan says:

      as long as the total is within Legal guide lines (Monthly).

  13. Patsy Chan says:

    Each case is different, we cannot give you advice on individual circumstances. Please discuss your concerns with owner and or legal council.