1. General Rules:
The California minimum wage for a resident manager is $12.00/hour for each hour worked during 2020. California Overtime: Overtime of 1½ times hourly rate (i.e. $18.00/hour) must be paid if the manager works more than 8 hours per day, 40 hours per week, or more than 6 consecutive days in a row.
If the Manager is not required to live at the property of an under 16 unit building, but the Manager chooses to live there, then any amount of rent may be charged.
If the Manager is required by the employer to live at the property as a condition of employment, then regardless of the number of units, the maximum monthly rent the Manager may be charged is $677.75 for a single Manager and $1,002.56 for a couple. There is no minimum amount of rent that must be charged.
If no rent is charged, then the free rent may be credited against the Manager’s wages by up to 2/3 the ordinary rental value of the unit but capped at $677.75 (1 Manager) or $1,002.56 (couple) per month.
Resident Managers are employees, not independent contractors, of the owner or management company. Under California law, the only responsibility the person living on site in a 16 or more unit building is to “have charge of the apartment house.”
2. Qualifications to General Rules:
UNDER 16 UNITS: If less than 16 units and the Manager is not required to live at the property, then Manager can be charged any rent, even if greater than $677.75 (1 Manager) or $1,002.56 (couple). But the $12.00/hr. minimum wage must be paid to Manager without offset if full rent is charged. A dollar-for-dollar wage credit is allowed as payment of minimum wage up to $677.75 or $1,002.56 (but not exceeding 2/3 the unit’s value) for every dollar the rent is reduced from the full market rent. This dollar-for-dollar wage reduction only applies if a written employment contract provides for this.
16 UNITS OR MORE:
(a) Exception to Wage Payments: “Offset of Wages”: In lieu of paying the full minimum wage, Manager’s wages may be credited by the lesser of
(A) 2/3 the unit’s rental value, and (B) $677.75 per month (1 Manager) or $1,002.56 per month (couple) if no rent is paid. If some partial rent is charged, then for each dollar rent reduction, wages may be credited by one dollar up to $677.75 (for 1 manager) or $1,002.56 (a couple) even though the apartment might be worth significantly more. This exception only applies if the Manager signs an agreement which provides for the offset.
(b) Exception to Maximum Rent: “Check Exchange”: If the Manager is required to live on site, then Manager may pay rent up to 2/3 the fair rental value of the unit (without regard to $677.75 and $1,002.56 limitations) provided that separate checks are “exchanged” for the Manager’s payment of rent and employer’s payment of wages. Thus, the employer must pay Manager the full minimum wage ($12.00 per hour for all hours worked) and the Manager must pay the employer rent in an amount not exceeding 2/3 the fair market rental value by separate checks.
Cities With Higher Minimum Wages: If the apartment is located in a city with a local minimum wage higher than the California minimum wage, then the employer must compensate the Manager based on the higher rates. Example: The minimum wage in Los Angeles and Santa Monica is presently $13.25/hr. and rises to $14.25/hr. on July 1, 2020. Berkeley is presently $15.59/hr.
California Sick Leave: Must provide a minimum of 3 days or 24 hours (48 hours in Los Angeles; 40 hrs. in Santa Monica) paid sick leave per year, but more days if the written agreement is not properly prepared.
Cell Phones: Must reimburse Manager the reasonable amount for the business use portion if a personal cell phone is required by the employer. No reimbursement of cell phone is necessary if not required.
Penalties for Non-Compliance: Liquidated damages for the Manager which then doubles the unpaid minimum wage for the past 3 years, plus 1 additional year which is not doubled, plus Manager’s attorney fees, court costs, statutory interest, among others! Total civil exposure of $100,000 to $200,000 or more. Also, violation of wages laws can be a misdemeanor with $1,000 fine and/or 6 months imprisonment.
Sign a Contract: No rent reduction credit to the minimum wages owed is allowed unless the Manager voluntarily signs a written agreement which provides for such a credit!
Update all Contracts: Review and update all contracts to be consistent with all 2020 California laws and the applicable City ordinances.
Management Certification: Require Manager to record all hours worked (as well as total monthly hours), sign, certify and deliver such report to the employer every month.
Record Keeping: Keep accurate records of all matters concerning hiring, hours worked, firing of managers and monthly rent paid.
Posting: Post the various wage orders and sick leave notifications on the premises as required by California law and local municipalities.
NOTE: (A) This summary is a general discussion of only California law for employers with less than 26 total employees. (B) Laws of other
governmental authorities may modify, limit, or reject California law. (C) For purposes of this Summary, the word “Manager” includes any
responsible person who lives on site in the apartment building. (D) This Summary may not apply to the reader’s particular situation. (E) For a fuller
discussion of these laws and their various exceptions and qualifications, please contact Mr. Alberstone.