Hello everybody.  Let’s start with a multiple choice question.  Please choose the correct answer:  

What types of time records does the law require an on-site manager to keep for the work he performs?

A.None.

B.The days of the week that the manager works.

C.The dates during the month that the manager works.

D.The beginning and ending times that the manager works each day.

 E.The nature of services that the manager performs each day.

F.Only B, D and E above.

G.Only C, D and E above.

H. Only B, C, D and E above.

If you are uncertain which is the correct answer, it will become clear later in this article. 

My Two Recommendations

Regular AOA readers of this column know that my first and most passionate recommendation to owners and management companies who employ resident managers is for them to have their employees sign a written employment contract setting forth all the terms and conditions of the hiring. 

The principal reason for this first recommendation is that without a signed written agreement, there is a substantial likelihood that the employer will, over time, owe the manager many thousands, if not tens of thousands, of dollars for underpaid or unpaid wages.    

My second most passionate recommendation involves the topic of this month’s column, namely:  Obtain written time records from your resident manager which document the days and hours the manager works throughout each month.  (Incidentally, that last sentence provides a clue to the correct answer to the foregoing multiple choice question, but it does not itself provide the correct answer.)

The principal reason for my second recommendation is that without such reports, owners and management companies may be exposed to a manager’s false and hugely inflated claims of unpaid hours worked throughout the manager’s many years of employment.  With no records, the employer will have a most difficult time rebutting the manager’s testimony if the employee sues in court or files a Complaint with the California Labor Commissioner for unpaid wages.

The General Law of Record Keeping

Resident managers are employees, not independent contractors.  That means that such managers will not receive an IRS “1099” form following the end of each tax year.

It also means that by law each employer of the manager, whether the employer is the owner or the management company, must obtain and retain the following information from the employee throughout the entire duration of employment: “Time records showing when the employee begins and ends each work period.  Meal periods, split shift intervals and total daily hours worked shall also be recorded.  Meal periods during which operations cease and authorized rest periods need not be recorded … [and the employer shall keep a record of the] total hours worked in the payroll period … .” (IWC Order 5-2001, section 7(A)(3) &(5))

The law does not require the manager to keep such records, but it does compel the employer to do so.  Unfortunately, there is no exception to the employer’s record keeping obligation just because the manager neglects or refuses to provide a written report of those hours.

If the employee fails to tender time records to the employer (so that the employer can keep the legally required accurate information), the employer has two options:  

  • First, he may continue to employ the manager, but at his own risk as the manager may later claim that he/she worked far more hours than the employer believes and then the manager may seek compensation for those additional hours.  (I have defended numerous cases where the manager was able to claim hundreds of extra hours of work because the employer had not received any time records by which to refute those contentions.)
  • Second, the employer may terminate the manager.  In most instances, a manager who is faced with either providing time records or being fired will provide the records.

What Hours of Work are Compensable Hours?

What hours of work are reportable, and in turn are compensable to the resident manager?

According to Industrial Welfare Commission Wage Order 5-2001, only “time spent carrying out assigned duties” constitute compensable hours worked by a resident manager.  Stated a little differently, a resident manager’s waiting time, on call time, and standby time at the apartment building are not compensable because the manager is not actually working.  He is merely waiting to work.

Here is an example:  Assume that the manager advertised an open house for a vacancy at the building for Wednesday, December 25, 2019 from 9:00 a.m. to 5:00 p.m.  Also assume that the manager waited around all day for prospective applicants to show up, but because that date was Christmas, only one potential tenant showed up during the eight hour span.  Further assume that the manager spent a total of fifteen minutes showing the applicant the vacancy.  How much time is reportable and is compensable? All 8 hours? Only 15 minutes? 7½ hours because the manager was entitled to a 30 minute lunch break?  Stop!  Before reading further, what do you think?  Please reread the hypothetical to see what you believe is the right answer.  It is a tricky issue.

Many owners conclude that all 8 hours are compensable working time because the manager had to remain on the premises and was available for the full day.  But the correct answer is:  15 minutes. That is the total time the manager was actually “carrying out the assigned duties.” The rest of the time he was merely waiting to carry out such duties.  Accordingly, under the example given above, the employer is only required to compensate the employee for 15 minutes of work.  

Recent California cases explain the rationale for that rule.  They hold that because the manager is at home and free to engage in personal activities while he is waiting around at the building (e.g., watching television, talking on the phone, cooking, brushing his teeth, sewing, playing cards, or entertaining), the employer need not compensate the employee for that time.  While the employer has the discretion to pay for that time should he so desire, there is no legal obligation to do so.

That said, I have a somewhat imprecise way of characterizing compensable time for a manager:  “If he is not moving, he is not working.”  Of course, that is not completely accurate. But nevertheless, most managers are only paid for actively doing things.  They are not hired just to sit and think.  (I know that managers reading this article might dispute my last statement. But compare a manager’s engagement with that of a chess scholar hired by a novice player to teach chess.  The chess expert is paid primarily to think, not to move around, whereas with a manager, it is mostly the other way around.)  

There is one significant exception to my “imprecise” characterization of compensable time.  Authorized rest periods are compensable time even though the manager is not actually working.  In general, an employee who works 4 hours per day or some major fraction thereof is entitled to a 10 minute period of resting time for which the employee must be compensated.

So, let me now answer the question I posed at the outset of this section, namely:  What hours of work are reportable and compensable?  The answer is: Only those hours that the resident manager is actually carrying out assigned duties, i.e., actually doing work.

If the manager is merely waiting around at the property to perform work some time later in the day, then those hours need not be reported.  On the other hand, if a manager, while on company business is offsite, such as waiting in line at a bank for a teller window to open so that the manager can deposit the rent checks, that waiting time is reportable and compensable because the manager is not at home.  So too would be the driving time to and from the bank.

What Type of Time Records Should the Employer Keep?

As noted above, to be completely compliant with law, the employer must keep accurate records showing the beginning and end of each daily work period and total daily and payroll period hours worked.  The law does not require the manager to keep any time records.  [The preceding sentence answers the multiple choice question at the outset of this column!]

Of course, the only way the employer can keep time records is if the manager provides them to the employer.

The problem with the manager recording his time for each segment of work he does and then provide the record to the employer is that it is extremely impractical for the manager to log such time and any such logs are notoriously inaccurate.  

Unlike clerks at a supermarket or servers at a restaurant who punch in and out with a time clock when arriving at work and leaving for home, managers do not work continuously throughout the day.  They start and stop numerous times each day, sometimes for just minutes at a time, such as to pick up a piece of trash lying on the ground in the morning, then three hours later to unlock a tenant’s door because the tenant left his key inside the unit, and then late in the evening to speak to a tenant who is complaining about a toilet that won’t flush.

Unless the manager logs in and logs out each time he does anything (which is tedious and impractical), he will likely forget the amount of time he spent intermittently performing each of the various tasks throughout his day.  Still, the law requires the employer to keep such records.

Some companies sell software programs by which the manager can download an “App” on their cell phone to log in and record hours worked as they are performed.  This might improve on paper logs, but it is still probably not totally accurate.

An Alternate Type of Time Records for an Employer to Keep

As a practicing attorney who has counseled many hundreds of owners and management companies that have been sued, brought before the Labor Commissioner, or threatened by managers’ lawyers to pay substantial sums of money for unpaid work, I propose a secondary, more effective method of record keeping.  Although this proposal itself does not comply with law, it is, from a practical perspective, probably the best defense an employer can have against a manager’s exaggerated hours of work alleged in a Complaint filed years later.  

The method is to require the manager to deliver to the employer on a monthly basis a certification of the total monthly hours that the manager performed working during the preceding month, together with a certification that the manager did not work more than 8 hours per day, 40 hours per week, or 6 days in a row.  The certification should also include a separate section which allows the manager to state that he did work more than 8 hours per day, 40 hours per week, or 6 days in a row, if that was the case, as overtime pay would then be required.

So long as the total reported monthly hours fluctuate each month and do not exceed the monthly maximum established in the employment agreement, it will be difficult for the manager, and probably not credible for him to later claim in court or at any other official proceeding, that he in fact worked numerous additional hours.  The jury, judge or Labor Commissioner is unlikely to find the manager’s testimony of additional hours is believable if the monthly hours in the certification fluctuate, but still remain below the maximum number of hours allowed under the employment contract.

While this secondary procedure for timekeeping does not comply with the law (because it does not break down the beginning and end of each work period or perhaps the total hours on a daily basis or for a payroll period), it is likely to dissuade a manager, and better still his attorney, from filing a lawsuit for unpaid wages.  

On the other hand, because daily time logs filled out by the manager typically report about the same number of hours he works day after day, they are rarely accurate as no resident manager (who does not have assigned office hours) will work the same number of hours each day throughout the month.  Such inaccurate reporting opens the door for the manager’s litigation lawyer to develop creative arguments, such as the employer improperly instructed the manager as to how to fill out the daily log and therefore the manager should recover for the additional non-reported hours.

In any event, the key to successfully defending a manager’s suit for unpaid wages, or better still to deter a lawyer from filing such an action in the first instance, is for the employer to obtain from the manager a monthly certification in which the total hours fluctuate month by month, and, hopefully, those hours are always reported at less than the maximum monthly hours authorized by the employment contract.

To be clear, I am not suggesting that employers disobey the law by only keeping a monthly certification of days and hours.  Instead, I am saying that a successful defense against a manager’s exaggerated claim would probably rely more heavily on a truthful monthly certification than on a daily time log sheet which is likely inaccurate.

Concluding Remarks

As noted at the outset of this article, my most passionate recommendation is that owners and management companies obtain a signed written employment agreement from the resident manager at the time of hiring.  If that was overlooked when the manager was first engaged, then at least prepare and have the manager sign such an agreement as soon as possible thereafter.  “Better late than never” should be the guiding principle.

My second passionate recommendation is that employers require the resident manager to turn in accurate time records, including signed monthly certifications of the total hours the manager worked, and certifying that the manager did not (or did, if that is the case) work more than 8 hours per day, 40 hours per week, or 6 days in a row during the preceding month.

With respect to nearly all existing resident manager employment contracts, owners and management companies should promptly confer with the lawyers who drafted their agreements to ensure that the contracts will comply with the applicable 2020 California and local City laws pertaining to minimum wage payments, offsets against wages for reduced rent, and the maximum rent that can be charged for the manager’s apartment.

Owners and management companies using printed form agreements should have counsel review them for legal sufficiency and compliance.  Such form contracts are unlikely to comport with applicable law.

A detailed discussion of the upcoming 2020 laws will appear in my column next month in the January 2020 issue of this AOA magazine.

Finally, the correct answer to the above multiple choice question is “A.”  Managers are not required by law to keep any time records.  The law only requires the employers to keep such records.

Dale Alberstone is a prominent real estate attorney who has specialized in real property and resident manager law for 40+ years.  He has been appointed to periodically serve as a judge pro tem of the Los Angeles Superior Court and is a former arbitrator for the American Arbitration Association.  

Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell.  An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity.

The foregoing article was authored in November 2019.  It is intended as a general overview of California law only and may not apply to the reader’s particular case.  Readers are cautioned to consult an advisor of their own selection with respect to any particular situation.

Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 269 S. Beverly Drive, Suite 1670, Beverly Hills, California 90212 or telephone (310) 277-7300.