When resident managers feel aggrieved, the current climate is rife for costly litigation. These onsite managers are becoming more sophisticated in maneuvering the legal system to take advantage of wrongs inflicted by their employers, aided by no shortage of enterprising attorneys.

A throng of lawyers are all to willing to handle resident manager complaints on a contingency basis, taking a percentage of the recovery at the tail end of an action, as well as attorney’s fees tacked on to the wages and liquidated damages recovered.

Translation for the rental housing industry: the burden of paying the disgruntled resident manager’s legal bills is borne by the landlord or property management company.

We noted in an earlier article that the Private Attorneys General Act (PAGA), codified in California Labor Code Sections 2698 through 2699.5, essentially creates a class action lawsuit by empowering the resident manager to not only sue his or her employer to recover unpaid wages, but to enlarge the scope of their lawsuit by acting on behalf of other managers that are employed in other buildings. With statewide wage, hour and rent limitation laws that have been ushered into 2018, we wanted to continue this thread of making sure that your resident manager relationships are compliant with the shifting lay of the land.

As the law makes a distinction in the size of the workforce, for purposes of this discussion, we’ll focus on rental businesses with less than 26 employees.

Where do property managers fit in?

California Code of Regulations Title 25, Section 42 makes it incumbent for owners to have a live-in manager if a building has 16 or more units. This person is defined as a “manager, janitor, housekeeper, or other responsible person”. These caretakers are considered employees in the eyes of the law, not independent contractors, and entitled to the prevailing minimum wage.

Although California’s minimum wage is $10.50 per hour, several Bay Area locales have raised the bar. San Francisco, Oakland, Berkeley, and Emeryville, among other municipalities, have set their own minimum wages that rental housing providers must be aware of.

In addition to California’s Labor Code, the Industrial Welfare Commission peels the onion deeper with a number of “Wage Orders” that govern employment in specific industries and occupations. One such order — enumerated as Wage Order №5 — regulates wages, hours and working conditions in the public housekeeping industry, which includes “apartment houses” and thus, is germane to resident managers of apartment complexes. The Order mandates employers to pay the minimum wage to a resident manager for every hour worked, exempting time the manager spends on personal tasks outside the purview of the assigned duties.

Since resident managers are employees, they are afforded full protections that include the ability to make a claim for an amount equal to the wages unlawfully unpaid, plus interest, if the landlord does not pay the minimum wage. Labor Code section 1194.2. This is just one of the perilous consequences that may await owners that do not dutifully pay their property’s overseers.

Parting thoughts

We’ve only scratched the surface here, not giving justice to the myriad of other complicated issues that can color the relationship with resident managers. Managing relationships in Bay Area rent controlled jurisdictions raise unique concerns that require the guidance of an attorney to carefully navigate this minefield.

No matter your unique circumstances, documentation and bookkeeping is the key to staying compliant, and the hallmarks of our service at Bornstein Law.

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