On-site Property Management Contract Agreements
“Ask Kari” is a monthly, Question & Answer feature by Kari Negri. Kari has two decades of property management experience, is a featured speaker at many industry trade shows, such as AAGLA’s annual trade show, and is the CEO of SKY Properties, Inc. in Los Angeles. Please submit your question today: kari@GetSky.net
This month we are featuring tips from Jennifer Baez-Silva who is in-house legal counsel at SKY Properties, Inc. We discuss property management tips with a specific focus on on-site manager contracts. If you have buildings with an on-site manager, be sure to review the tips below!
- On-Site Manager Agreements Can Be Complex and Confusing
First off, your on-site manager is your manager (i.e., your employee) but is also your tenant. This brings a level of complexity to the issue as opposed to if they are only either a tenant or a manager. They, by definition, are both. This makes them an employee, which brings labor, and employment law into the mix. It’s important to understand this. Your on-site manager is both your tenant and your employee. As an owner, you must follow employment law.
Wage Order No. 5 is the applicable wage order governing resident managers (Public Housekeeping Order) (link below).
- Not Knowing the Law is No Excuse California
labor law is serious business. If you fail to follow California Labor Law, you are setting yourself up for civil penalties, and possible criminal penalties, sanctions, and massive litigation.
- Create a Bullet Proof Manager Contract: 16 Units or More? Protect Yourself
In California, if there are 16 units or more a designated ‘responsible person’ is required to live on site. Put a manager contract in place, which defines the terms of your agreement, including payment, timecard keeping, duties and responsibilities, time off, etc.
- Record Keeping
Your on-site manager must provide time cards to you on a weekly or bi-weekly basis. It is also a good idea to have a monthly certification of time that your manager signs for hours worked for each preceding month. If you fail to keep a record of hours worked, you expose yourself to an employee making a claim against you for hours worked but not paid. If you have no records to prove actual hours, you will be responsible for non-payment, overtime, penalties, etc. by court order. This can quickly become an error running in the tens of thousands of dollars.
So it is important to have weekly or bi-weekly timecards submitted, as well as, monthly certification of all hours worked in a month. The second part need not be overly complicated. For example, some employers simply total monthly hours
and have the employee sign, “I certify that xx hours are my total hours worked for the period of January 1 – January 31, 2017.” This certification is important in the event that an employee seeks later to file a wage suit against the owner and/or the property management company. It is a certified record of the hours worked, which can then be correlated to wages paid.
Again, if no records exist, wage and hour claims can be huge, extremely litigious and costly. California laws are very unforgiving when it comes to employment law. Depending on the amount of time the resident manager has worked, penalties can go into the six-figures very quickly. This is a result of penalties doubling and tripling for back pay and overtime not paid.
- Review Current Manager Agreements
Make certain to review your manager agreements every year. As California Labor Law updates, you want to stay on top of it.
If you acquire a building and keep the current resident manager or when you revise your current resident manager agreement, you might consider having the resident manager sign a statement saying that no back wages or payments are due at that point. That all wages are current for hours worked as of the revision date.
- Maximum Lodging Credit
Stay aware of the maximum you may credit your on-site manager for their unit. Revised as of January 1, 2016, the owner is limited in the amount they may credit for meals or lodging to meet part of their employer’s minimum wage obligation. The amounts so credited may not be more than the following:
||Effective January 1, 2016
|Room occupied alone
||$47.03 per week
Apartment – two thirds (2/3) of the ordinary rental value, and in no
event more than:
||$38.82 per week
$564.81 per month
|Where a couple are both employed by the employer, two thirds (2/3) of the ordinary rental value, and in no event more than:
||$835.49 per month
In closing, be certain to have a very well documented and thorough contract, and keep accurate records of time worked for all of your employees, whether it’s on a weekly, bi-weekly and/or monthly basis.
Link to Wage Order 5: http://www.dir.ca.gov/IWC/IWCArticle5.pdf Watch the video to this article on our YouTube Channel: https://www.youtube.com/user/SkyPropertiesIncLA.
As always, please remember, I am not an attorney. Seek clarification through your attorney. All articles are simply an opinion. Stay in touch at: https://www.skypropertiesinc.com/.