This Month’s Question comes from Brad in Los Angeles:
“Hi Kari, I heard a building owner can be sued for not keeping proper timesheets for their on-site building managers? How can a lawsuit be avoided?”
Hi Brad! A great question, and although I’m certainly not an attorney and cannot offer legal advice, I am aware of owners being sued or turned into the labor board for not keeping proper timesheets of people performing work at their building. This tension is not unique to the real estate industry. Have you been hearing those radio commercials where companies want to audit a person’s hours worked for free so they can offer to sue their employer!? Not sure if this is ambulance-chaserish, but litigators may be hunting for employees who want to sue their employers for potential back-pay.
What I’ve witnessed in the property management industry is that if, for example, an on-site manager claims they worked over 40 hours, weekends, etc. for the last several years, and no one had accounted for and paid them for that time, they can come back to the owner with their attorney, pursue the owner for back-pay, overtime, penalties, interest, etc. and win. Imagine multiple years of back-pay and penalties.
If your on-site manager came to you and said you owe them five years of overtime, do you have timesheet records to prove otherwise to a judge? If not, you are at risk. As a building owner (or any type of business owner for that matter), if this doesn’t motivate you to closely follow this law, it should.
Here Are 6 Tips to Consider:
Tip 1: Consult with your attorney to review the law.
Take the simple step to inquire about how you are managing your building and compliance with the law.
Tip 2: In the eyes of the state, understand that your on-site manager is your employee.
According to the state of California, your on-site manager is your employee. Some owners find a trustworthy tenant and simply give them a rent credit to collect rents, call in maintenance, etc. If you are doing this, you are directing an employee to perform work and must pay them minimum wage, payroll taxes, and SSDI. Also, anyone who is not a licensed contractor or does not carry liability insurance or worker’s comp could be considered an employee. By the way, these are some of the benefits to hiring a professional management firm. The manager becomes an employee of the management firm, thereby providing you a layer of protection and the peace of mind that proper records are being kept.
Tip 3: Know your on-site manager rent credit maximum!
Yes, the state regulates the maximum rent credit you may offer. Mr. Jesse L. Atilano CEO of www.laborlawllc.com reiterates that, “Rent credit can only be given in accordance with the IWC, Industrial Welfare Commission Order, which specifically prescribes amounts of rent that can be offset.” See IWC Order #5: http://www.dir.ca.gov/IWC/IWCArticle5.pdf
Tip 4: Management contract – a must!
All on-site managers must have a manager contract, and the hours defined in the contract should be supported by time sheets. AAGLA members are offered access to sample contracts to review.
Tip 5: It’s time for timesheets!
Make sure your managers, maintenance personnel, and all other employees are filling out weekly timesheets so you have a record of paying them properly according to state and federal laws. If no timesheets exist, there is a risk of exposure if an employee claims there are wages owed for overtime. If this discrepancy spans over multiple years, you may be on the hook for quite a large sum.
Tip 6: Stay informed.
I can’t stress enough about consulting with your attorney here. Additionally, stay informed by visiting http://www.dir.ca.gov/dlse/faq_paydays.htm
Have a question for Kari? Please submit it to her via commenting on the: Ask Kari YouTube Channel
#propertymanagement #losangeles #apartmentmanagement