This article was posted on Tuesday, Aug 01, 2023

 

I continue in this article to share my insights and experiences defending property owners and management companies so that, hopefully, you gain a better appreciation for how your actions – or inaction – could be planting the seeds of future legal problems with your on-site managers. As in Part I of this article (AOA Magazine, June edition), which covered claims number 1- 4 below, I start with a typical resident manager lawsuit and then look backwards to the conduct that may have “caused” each claim in the lawsuit.

 

I will start with claim no. 5 in the caption below – “Failure to Provide Accurate Itemized Wage Statements.”

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5.      Failure to Provide Accurate Wage Statements

I actually have an admission to make about this claim – I can offer no great insights into how to avoid being sued for “wage statement” violations. I say this because an owner already being sued by a resident manager for wage and hour violations, like claim nos. 1-4 above, will inevitably also be slapped with a claim that he failed to provide accurate wage statements – the theory being that if he failed to accurately pay, as alleged, then the wage statements he provided were de facto inaccurate. Simply put, this claim is a “tag-along;” it is completely derivative of the other, more substantive claims.

What I can tell you, however, is that if you have no idea what the paragraph above is referring to or what a wage statement is, then you should become familiar with the applicable legal requirements. So read on.

The Labor Code requires that employees be paid at least twice per month. With each payment, an employer must provide a “wage statement” that contains specific information, including (among other things) the total hours worked during that pay period, total wages paid and the hourly rate. These rules apply to you if you employ a resident manager. In fact, even if you are paying your resident manager with a rent credit (and therefore paying nothing out of pocket), you still must “pay” and issue a wage statement at least twice per month. Needless to say, you are not complying with your legal obligation to provide accurate wage statements if you provide no wage statement at all.

 

6. Waiting Time Penalties

“Waiting time penalties” is another claim likely to be asserted about which I have little to say (I know – this has never stopped me before), but I will explain what this claim is about. Simply put, a terminated employee must be paid his final wages immediately, or within 72 hours if he quits without prior notice. In either case, an employer that does not timely pay the employee’s wages may be liable for “waiting time penalties” that can accrue for 30 days.

Like the wage statement claim we discussed above, “waiting time penalties” claims typically are derivative, meaning they depend on the success of the other, more substantive wage and hour claims. In other words, if you were paying your resident manager inadequately all along, as he claims, then you will owe him money upon his termination, and “waiting time penalties” may kick in – even if you timely provide him with a final (albeit inadequate) paycheck. So this claim, like the wage statement claim, will rise or fall based on the resident manager’s more substantive wage and hour claims.

 

7.      Failure to Reimburse Business Expenses

Employers must reimburse workers for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” In plain English, you must pay him/her for necessary business expenses.

Plaintiff lawyers typically – although not always – assert this claim in the context of cell phone usage and to a lesser degree, wifi usage. If a resident manager needs their cell phone to perform their duties and uses a personal cell phone, then you must reimburse some portion of the monthly charges. The same holds true for wifi. I therefore recommend you address this issue in a resident manager agreement to avoid future disputes or claims.

 

8.      Discrimination, Retaliation and Wrongful Termination

I am lumping together the last five causes of action (nos. 8-12) because they all are of the same stripes. These are not wage and hour claims. Rather, they assert that the owner/employer wrongfully terminated, or retaliated or discriminated against, the resident manager – or some combination thereof.

These claims do not appear in every wage and hour lawsuit. Sometimes a lawsuit is just a good old fashioned “hey, you owe me money” lawsuit. But I have noticed a disturbing trend in which more and more wage and hour lawsuits include these discrimination-type claims – almost as if plaintiff lawyers figure that since they have to pay a court filing fee anyway, they might as well get their money’s worth.

Many potential hooks exist for claiming discrimination or wrongful termination.  To name a few, race, sex, sexual orientation, color, religion, creed, ancestry, national origin, marital status, familial status, source of income, age, physical or mental handicap, disability all can be a basis for wrongful discrimination. The claims I see most often result from alleged retaliation by the owner for the resident manager’s becoming injured, making a workers compensation claim, or complaining about some unlawful activity – like the owner’s failing to pay properly.

I want to briefly discuss this last item because you may not be familiar with it. The Labor Code prohibits an employer from retaliating against an employee who discloses information he reasonably believes to involve a legal violation to someone who has the authority to investigate or correct the violation. This can include complaints about not being paid properly. Therefore, terminating an employee who has complained about not being paid properly – even if the employee ultimately is wrong – creates the risk of a retaliation claim.

So how should you deal with all this? Every situation varies, of course, but the one piece of general advice I can offer is that if your resident manager complains about something that could be actionable, like an injury or improper payment – no matter how trivial you deem it and regardless of the form of the complaint – deal with it. Don’t ignore it. Even more importantly, document that you are dealing with it. By that I mean note the complaint in writing, investigate it, record the results of your investigation and resulting action or, if appropriate, inaction. All this serves two purposes. First, it makes the resident manager feel heard. Second, it establishes a paper trail.

Also make sure to document in writing any performance deficiencies, so that, if and when you face a retaliation or discrimination claim appended to a wage and hour lawsuit, you can provide your lawyer with the ammunition needed to more easily dispose of or negotiate away those claims.

 

Gary Ganchrow chairs the Litigation Department at Parker Milliken Clark O’Hara and Samuelian, which has been providing full legal service to the Los Angeles community for more than a century. He has served as an Adjunct Professor at the USC School of Law and is a frequent contributor to AOA Magazine. He regularly advises on, litigates and writes about a variety of employment, property management and business matters, and can be reached at 213-683-6535 and [email protected]. This article is for informational purposes only and should not be considered legal advice or establishing an attorney-client relationship.