The Labor Code of the State of California generally sets forth the time and manner of paying wages to employees, minimum wage requirements, and mandatory overtime pay. In addition to the provisions of the Labor Code, the Industrial Welfare Commission of the State of California has published 18 “Wage Orders” which further govern employment in the State of California. Those Wage Orders cover specific industries and occupations, and there is even one general minimum Wage Order that applies to all California employers and employees.
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Don’t Let the Owner Convince You That You Are an “Independent Contractor”
We regularly see apartment owners who convince their resident managers that the manager is not an employee but rather an independent contractor, so the wage laws do not apply. That is simply wrong. On April 30, 2018 the California Supreme Court addressed the question of just when the relationship can be considered one involving an independent contractor and the simple answer is, “Almost never!”
In Dynamex Operations West, Inc. v. Superior Court (4 Cal 5th 903, for those who want to read the actual opinion) (“Dynamex”) the Supreme Court first held that in what looks like an employment relationship, there is a presumption that the relationship is employer/employee. It is then up to the employer to prove all three parts of what is known as the ABC test. If the employer fails to prove any one of them, taken in any order, the discussion is over and the relationship is held to be employer/employee, and not independent contractor. The three tests boil down to, A.) Is the worker free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact? B.) Does the worker perform work that is outside the usual course of the hiring entity’s business? And, C.) Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity? The Legislature so agreed with that logic that it made it part of the Labor Code beginning at Section 2725! And if the relationship seems to be one of employment, it is up to the supposed employer to overcome a presumption that it is in fact an employer-employee relationship!
So, if the owner or management company instructs you on what your responsibilities are, you are an employee. If the job you do is within the usual course of the owner’s business (since the business is owning, maintaining and managing apartments, being the manager seems to fit), you are an employee. And, finally, unless you are a licensed realtor with a property management business, you are not “…customarily engaged in an independently established trade, occupation, or business…” so, again you are an employee. Resident managers are almost always employees. We have yet to see one who is not. The wage laws do indeed apply to you if you are a resident manager!
A Free Apartment May Not Be Used as Pay
A “free” apartment may not be used as a credit against the minimum wage requirement without a voluntarily entered into written agreement which provides for that credit.
The part of Order #5 which creates the most confusion and consternation for apartment owners and property management companies is paragraph #10 of the order, which prohibits taking a credit against the minimum wage obligation due to the resident apartment manager without a voluntary written agreement between the employer and the employee.
This means that if the resident apartment manager is given a “free” apartment in exchange for his or her services, the owner or property management company must still pay the resident apartment manager minimum wage for each and every hour worked on the premises unless there is a written agreement, voluntarily entered into between the resident apartment manager and the owner or property management company, which specifically provides that a credit will be taken against the wages owed for the value of the apartment.
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Employer Has Burden of Proof
If the employer has not kept legally required time records for the resident manager employee, the burden of disproving the hours the resident manager claims to have worked falls on the employer!
Wage Order #5 also requires that the apartment owner or property management company maintain time records showing when the resident apartment manager begins and ends each work period! That means that they must develop a system for you as the resident apartment manager to report the number of hours you work each and every day,week,or two-week period.
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