Several of our property owning clients have come to us with previous negative experiences having been confronted with issues related to the compensation of the on-site manager, which is required for properties with 16 or more units in California. This is commonly overlooked by property owners who are not using a professional or competent management company and/or are looking to take the short cut in order to maximize their bottom line. Therefore, here is an overview summarized by a recent training provided by the CA Association of Realtors of the current law in California in this regard:
The resident manager is entitled to receive compensation no less than the California’s minimum wage, presently $8.00 per hour but increases to $9.00 per hour on July 1, 2014 and to $10.00 per hour on January 1, 2016. Additional laws regarding compensating the resident manager include:
§ Over-time pay. California law requires employers to pay over-time rates at one-and-one-half (1 ½) times the basic minimum wage as follows::
o Time worked exceeding 8 hours in any one day.
o Time worked exceeding 40 hours in one week.
o All time worked during a 7th day of consecutive employment
§ Free or partial rent. Rent credit may be applied toward the minimum wages due the resident manager under specific conditions in accordance with California wage law. In determining how much credit toward rent may be given is helpful in performing the investment analysis process:
o The maximum amount of rental credit allowed toward compensation is to be no more than two-thirds (2/3) of the “ordinary rental value” of an apartment unit, but not to exceed a monthly amount of
o 451.89 for a single person, or
o $668.46 for a couple.
b. Resident manager’s employer: Payroll expenses, such as income taxes, disability insurance and worker’s compensation, must be considered when establishing property operating expenses. If the licensee is going to perform property management services on behalf of the buyer following the close of escrow it is important to establish who will be considered the “employer” of the resident manager.
Please let Neighborhood Property Management know if we can answer any of your questions as it relates to assuring you conform to the legal requirements for your on-site manager employee. Contact us today at 559-270-6776 or info@neighborhoodpm.com.
The resident manager is entitled to receive compensation no less than the California’s minimum wage, presently $8.00 per hour but increases to $9.00 per hour on July 1, 2014 and to $10.00 per hour on January 1, 2016. Additional laws regarding compensating the resident manager include:
§ Over-time pay. California law requires employers to pay over-time rates at one-and-one-half (1 ½) times the basic minimum wage as follows::
o Time worked exceeding 8 hours in any one day.
o Time worked exceeding 40 hours in one week.
o All time worked during a 7th day of consecutive employment
§ Free or partial rent. Rent credit may be applied toward the minimum wages due the resident manager under specific conditions in accordance with California wage law. In determining how much credit toward rent may be given is helpful in performing the investment analysis process:
o The maximum amount of rental credit allowed toward compensation is to be no more than two-thirds (2/3) of the “ordinary rental value” of an apartment unit, but not to exceed a monthly amount of
o 451.89 for a single person, or
o $668.46 for a couple.
b. Resident manager’s employer: Payroll expenses, such as income taxes, disability insurance and worker’s compensation, must be considered when establishing property operating expenses. If the licensee is going to perform property management services on behalf of the buyer following the close of escrow it is important to establish who will be considered the “employer” of the resident manager.
Please let Neighborhood Property Management know if we can answer any of your questions as it relates to assuring you conform to the legal requirements for your on-site manager employee. Contact us today at 559-270-6776 or info@neighborhoodpm.com.
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