I try, in my articles, to offer a legal perspective that you, as a property owner or management company, may not possess. And while you almost certainly don’t need me to tell you of the many challenges that managing a property presents, I find property owners and property managers often underestimate the legal and perception obstacles they face when confronted with claims by employees, including on-site managers. I discuss this below and, more importantly, what you can do about it.
Preliminarily, it is important to note that even if you are a “mom and pop” owner – and even if the law does not require you to have an on-site manager – once you pay a tenant to help you, the law views you as an employer. The applicable Wage Order, which has the force of law, defines “employer” as any “person” – and, yes, “person” can mean you – “who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.” In other words, if you pay a tenant to help at the building – no matter how minimal the help and even if you “pay” through a free apartment or rent discount – the law considers you to be that tenant’s employer. Congratulations! You have just joined the wacky world of California labor law, and you now have two strikes against you – you are both a landlord and an employer.
Now that you’re an employer, you need to understand your record-keeping obligations, which, as applied to resident managers, are simultaneously unrealistic (“fanciful” would probably be a better word) and mission-critical if you want to protect yourself from trouble. Specifically, the law requires every employer to keep accurate information with respect to each employee, including time records showing when each employee begins and ends each “work period” (and meal break, if applicable).
Manager Time Sheet Records
Anyone who ever has tried to threaten or cajole an on-site manager to keep time records knows the challenges of obtaining meaningful time records. And the manager’s resistance is not without good reason, because while generating time records might be relatively straightforward for someone like an office staff employee or security guard, who work and get paid for defined and regular shifts, these same requirements present significant challenges for a resident manager — whose work rarely fits into neatly packaged “work periods.” It is the proverbial square peg in a round hole, because the nature of a resident manager’s job is such that her work may be sporadic and irregular and consists of myriad “work periods” daily. This is especially true given the special rule that a resident manager – unlike a secretary, for example – is deemed to be “working” only during the actual “time spent carrying out assigned duties” (but not during downtime).
Unfortunately, however, the Labor Code makes no allowances for the unique nature of a resident manager’s job, leading to one of two results. One, the resident manager keeps no time records at all or, two, she keeps woefully inadequate records that do not correctly record her actual work time and the accuracy of which therefore is subject to challenge.
Both these results can present significant legal problems for you, the employer – far more significant than most owners realize. Because if an employer does not have proper time records and an employee claims she has been underpaid, the law places the legal burden on you to rebut the employee’s claims regarding how many hours she worked. That is difficult to do without credible records when you are not physically present at the site. Furthermore, even when rebutting those claims might be possible, doing so usually involves engaging in a fact-intensive investigation – i.e., interviewing tenants, analyzing tasks performed, etc. – that quickly becomes prohibitively expensive when compared with the possible savings.
Protect Yourself Against Claims
For these reasons, not having reliable time records may be the single biggest cause of employee claims – and of employers paying to settle those claims. Conversely, the best way to protect yourself from such claims is to make sure you have reliable records that can withstand scrutiny.
Owners also tend not to fully appreciate that if an employee asserts an employment claim, the employer and the employee are not starting on even remotely equal footing – not before the Labor Commissioner and not in a court of law. Keep in mind that almost every juror will have been an employee – and many will remember a time they felt underappreciated and mistreated. Very few jurors will have owned properties.
Owners should expect to confront bias in the courts as well (and not only from jurors). For example, courts generally do not trust sworn declarations that employers obtain from non-suing employees to help rebut the claims of an employee who is suing. Courts automatically suspect “coercion by the employer” in obtaining these declarations. In fact, one court recently rejected a series of employee declarations even though the employees swore they were not coerced into signing the declarations, understood what they were signing, and knew the employer would use declarations to defend against the lawsuit.
The point is as follows: in my experience, many property owners seem to believe that any kind of pro forma time record will protect them – even time records that recite an identical number of hours every day (and which often magically add up to an agreed-upon monthly hours). These owners are placing way too much faith in these records – even if the employee has signed them and declared their accuracy – and failing to account for the natural skepticism among jurors and the courts in favor of the employee.
The lesson here should be clear. As an owner and employer, you will not get the benefit of the doubt if claims are brought against you. Accordingly, take to heart Benjamin Franklin’s adage, because when it comes to dealing with employment claims, an ounce of prevention truly is worth a pound of cure.
[Editor’s Note: AOA members may download the FREE AOA form 119A – Resident Manager Monthly Time Report – by visiting the forms section at www.aoausa.com.]
Gary Ganchrow is a shareholder at the 107-year-old firm of Parker Milliken Clark O’Hara and Samuelian, 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.