Hello everybody.  In the August 2020 issue of this magazine, I discussed the requirements of providing on-site resident apartment managers with legally mandated meal breaks and rest periods.  It was a topic that in the 39 years that I have been the legal writer for AOA, I had not previously addressed.

But a further discussion of meal breaks (and some comments about rest periods) is once again appropriate because on February 25, 2021 the California Supreme Court, in Donohue v. AMN Services, issued another important ruling concerning meal breaks.  Although that case involved an employee who was not a resident manager, the high court’s determination also applies to landlords and management companies that employ on-site managers.

Some Background

AOA members may recall from my previous article that if a resident manager works more than five hours during a given day, the general rule is that he/she is entitled to receive a 30-minute unpaid meal break.  If the manager does not receive the 30 minute meal break, the employer is required to pay the employee one full hour of wages as a penalty.

In Donohue, the employer had a policy of rounding time records for meals to the nearest 10 minute increments.  That resulted in meal periods taken by the employee as short as 21 minutes being rounded up to 30 minutes.  In other words, even though the employee took a meal break somewhat less than 30 minutes, it was clocked by the employer as a full 30 minutes.

The Supreme Court held that “even a minor infringement of the meal period triggers the premium pay obligation. …To avoid liability, an employer must provide its employees with full and timely meal periods whenever those meal periods are required.”

Here is how the high court explained the reasoning behind the requirement for the full 30-minute meal period: “The premise of this approach is that even relatively minor infringements on meal periods can cause substantial burdens to the employee. Forcing employees to work through their meal periods not only causes economic burdens in the form of extra work but also noneconomic burdens on the employees’ health, safety, and well-being.”

The take away for landlords and management companies is to ensure that their employment contracts with managers allow the managers to take a full 30-minute meal break if the employees will work more than 5 hours on any given day, and never round up the actual meal time to 30 minutes.

What follows is a further discussion of the employment of a manager relative to meal breaks and rest periods.

Managers Are Employees

To begin, please recall that resident managers in apartment buildings are employees.  They are not independent contractors.  As employees, managers do not receive 1099s.  As employees, managers are protected by numerous wage and hour laws which typically do not apply to independent contractors.  

Among those protections are the rights of resident managers (as well as the rights of other on-site resident employees, such as caretakers, key holders and janitors) to receive meal periods and rest breaks if certain conditions are met.

Meal Period Laws

As stated above, employers are required to provide their managers with 30 consecutive minutes as a meal break if the manager will work more than 5 hours on any given day.  Per the Donahue case, it must be a full 30 minutes – not a minute less. 

However, there is one exception to that requirement.  If the manager will work more than 5 but not more than 6 hours for the day, then the meal period may be waived by the mutual consent of the employer and the manager.  The reason for that exception is that some employees prefer to work 6 hours straight and then be off work, rather than be required to take a 30 minute meal break at the end of 5 hours and then return for one more hour of work.

Unlike required rest periods, a meal break is not counted toward hours worked, and therefore the law does not require that the manager be paid for the 30-minute meal period taken.

However, if the employer does not provide the manager with a required meal break, then the employee is entitled to one hour of regular pay for each meal period that is not provided.

During the 30-minute meal period, the manager must be relieved of all duties and not perform any work for the employer. 

The controlling legal authority is Industrial Welfare Commission Order 5-2001.

Rest Period Laws

The controlling legal authority for rest periods is also IWC Order 5-2001.  It provides that every employer (which includes landlords and management companies) must permit their managers and other on-site resident personnel to take certain rest periods.  Insofar as practicable, those rest periods are to be in the middle of each work period.

The rest period time is based on the total hours worked daily at the rate of 10 minutes of rest time per each 4 hours worked “or major fraction thereof.”  However, a rest period is not required if the manager’s daily work time is less than 3-1/2 hours.

Rest period time (unlike meal breaks) is counted toward hours worked, meaning that the manager must be compensated for that time.  If the employer fails to allow a required rest period, the manager is entitled to receive one full hour of pay for each work day that he/she was deprived of a rest period.

During the rest period, the manager must be relieved of all duties for the full 10-minute period.  He/she must not perform any work for the employer.  

The Good News

With the rules for meal breaks and rest periods now in mind, here is the good news:  In practice, the rules usually will not apply to most managers, at least those in small buildings having, perhaps, 25 or fewer units.

The reason is because most managers in small buildings work less than 3-1/2 hours per day, and in almost every case, work less than 5 hours during a day.  

The “hours worked” by an on-site manager are only counted for the time the manager is actually “carrying out assigned duties” (plus 10 minutes for any required rest period).   That means that a manager’s waiting time, on-call time and standby time while the manager is present at the property are not considered to be hours worked by the manager.  The manager would only be “waiting” to work, but not actually working.

For example, assume that a landlord advertises an open house for the manager to show a vacancy from 9 a.m. to 5 p.m. next Saturday.  Also assume the manager waits around all day at the property for potential renters to show up, but only one stops by and the manager spends 15 minutes showing the unit to the potential applicant.

Only the 15 minutes that the manager spent would be considered “hours worked.”  The remaining 7-3/4 hours were waiting time.  The manager was not carrying out assigned duties.  He/she was merely waiting to work.

Our courts have reasoned that because the manager lives in the building, he or she is at home and, therefore, free to engage in his/her own personal activities while waiting to work.  That waiting time does not count toward hours worked.  “Hours worked” is only the time the manager is actually carrying out assigned duties (plus any required 10 minute rest period).   [Attorneys may research this point further in Von Nothdurft v. Steck (227 C.A.4th 524, 539), and related cases.]  

 

General Comments

The reality is that it will be unlikely that a manager, at least in smaller buildings, will actually work more than 3-1/2 hours on a given day, and even less likely that the employee will work more than 5 hours on any day.  Therefore, 30 minute meal breaks and 10 minute rest periods need not be provided. 

Still, in every employment contract (and I have drafted many hundreds of them for AOA members), the legalese should expressly provide for the meal breaks and rest periods in accordance with law whether the building is small or large.

In general, the legal requirements for the employment of resident managers has become technical and complex, particularly with respect to numerous laws regulating the maximum rent they can pay, the allowable hours they can work, and the wages they must be paid.

For example, the general rule for 2021 is that $734.21 is the maximum monthly rent that can lawfully be charged to a single manager who is required to live on site as a condition of employment.  If a couple living in the same unit is employed as manager, the maximum monthly rent for 2021 is $1,086.07.  (There is no minimum rent to be charged.)

But there are exceptions to those rules.  For a detailed discussion of the exceptions, please review my column entitled “New Resident Manager Laws for 2021” in the January 2021 issue of this magazine.

Additionally, for 2021, the maximum amount of any rent reduction that may be credited to a manager’s wages is also $734.21 for one manager and $1,086.07for a couple who share the same apartment unit.  But even then, no such credit can be taken if the managers have not voluntarily signed a written agreement providing for that credit.

Managers who are terminated by their employers sometimes sue to redress claims of excessive charges of rent, underpayment of wages, overtime worked, and failure of the employer to provide rest and meal periods.  That is bad for the employer, but much worse for employers are managers who file such lawsuits against the landlord or management company while still employed as the managers.  Employers who are sued by existing managers cannot then fire them without running the substantial risk of being additionally sued for wrongful termination.

 

Recommendations

To diminish the likelihood of a wage, hour or rent lawsuit being filed by a manager against the employing landlord or management company, here is what I recommend to AOA members:

  1. Have each manager sign a properly drafted written employment contract at the time of the hiring.  Preprinted form agreements are probably better than nothing, but they are often woefully inadequate and likely not consistent with all the 2021 laws.  It is best to have the Resident Manager Agreement drafted by a seasoned attorney practicing in the field of resident manager law.
  2. If you already have an employment agreement, review it for consistency with 2021 laws.  Update it as necessary or have an entirely new one drafted by counsel and signed by the parties.
  3. If both the employer and manager did not sign an employment contract at the time of hiring, have one signed now.
  4. Require the manager to provide the employer with time records of the hours worked.  I particularly favor having the manager also certify on a monthly basis the total number of hours he or she worked during the preceding month and that he/she did not work more than 8 hours on a single day, more than 40 hours per week or more than six days in a row, each of which would otherwise trigger overtime.  That may lessen the employer’s exposure if the manager later files suit.   
  5. Finally, retain the time records for at least four years after the employment relationship with the manager is terminated.  Bear in mind that the statute of limitations allows the manager to sue for unpaid wages arising over the past 3 to 4 years, depending on the nature of the claims.  

Dale Alberstone is a prominent real estate attorney who has specialized in real property and resident manager law for the past 40+ years.  He is also a former arbitrator for the American Arbitration Association.  

Mr. Alberstone has been awarded a 5-Star AV rating from Martindale-Hubbell, the 125 year old national rating service of attorneys.  A 5-Star AV rating is the highest possible rating bestowed and reflects an attorney who has reached the heights of professional excellence and who is recognized for the highest levels of skill and ethical standards.

The foregoing article was authored on April 1, 2021.  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 a lawyer of their own selection with respect to any particular situation.

Questions of a general nature are warmly invited.  Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 269 S. Beverly Drive, Suite 1670; Beverly Hills, California 90212, or phone: (310) 277-7300.