Facts: A property owner hires a resident manager for a multi-unit residential complex. The owner and manager enter into a resident management agreement, which provides the manager is to receive occupancy of a unit in the complex and money for utilities as compensation for their services. Later, the manager files a complaint with the California Labor Commission for unpaid wages since the property owner did not pay the manager the minimum wage as required by state labor law. The Commission grants the manager compensation, but entitles the property owner to a credit for the rental unit occupied at no cost by the manager.
Claim: The residential manager seeks to recover the amount of the credit given to the property owner, claiming the management agreement establishing the rental unit as compensation was invalid since it did not comply with minimum wage requirements.
Counter claim: The property owner claims they are entitled to the credit since state law allows a property owner to compensate a manager by allowing them to occupy a rental unit for free if they enter into a written management agreement, which the residential manager voluntarily signed and agreed to.
Holding: A California court of appeals held the property owner was entitled to a credit for the rental unit the residential manager occupied without paying rental fees since the residential manager agreed to occupy the rental unit as compensation for their services when they signed the written agreement, thus satisfying the requirements of state labor law. [Von Nothdurft v. Steck (June 26, 2014)_CA4th_]
Editor’s note – A resident manager’s employment is subject to minimum wage laws even though the portion of the wages paid by a reduction or elimination of rent is not taxable as personal income. Thus, the rent credit is considered when determining the resident manager’s pay for minimum wage requirements. The rent credit is used as part of the wages received per hour of work performed by a resident manager, limited by caps on the rent credit. [See first tuesday Form 591]