Strauss & Strauss has a long history of representing California employees in resident apartment manager wage claims. This article is an update on this aspect of California law.

California law is very peculiar and confusing when it comes to the payment of wages to resident managers. Apartment owners and/or management companies (sometimes the owner is the manager and sometimes the apartment management company is a separate entity, but most of the time both can be liable for unpaid wages) can only credit a certain amount of “free” rent against any obligation to pay the minimum wage.

Have we confused you already?

Let’s start with the basics.

1) All hours worked by employees in California have to be paid at a rate of no less than the current minimum wage. There are only a few exceptions to this rule, and an apartment manager who receives free rent is probably not going to meet one of the exceptions. So every hour the apartment manager works must be paid at the minimum wage rate. The employee may bring a resident apartment manager wage claim to recover those minimum wages.

2) But an employer can use “free” or reduced rent as an offset (or “rent credit”) against any minimum wages it may owe a resident manager for work performed. The state of California sets a maximum amount of what the rent credit can be.

Currently, as of September 2015, the maximum rent credit is as follows:

  • For a single resident manager who occupies a single apartment: 2/3 of the ordinary rental value of the apartment or $508.38 per month, whichever is lower; and
  • For a couple both employed as resident managers who occupy a single apartment: 2/3 of the ordinary rental value of the apartment or $752.02 per month, whichever is lower.

On January 1, 2016, the maximum rent credit will increase as follows:

  • For a single resident manager who occupies a single apartment: 2/3 of the ordinary rental value of the apartment or $564.81 per month, whichever is lower; and
  • For a couple both employed as resident managers who occupy a single apartment: 2/3 of the ordinary rental value of the apartment or $835.49 per month, whichever is lower.

3) The employer can only use rent credit under certain circumstances.  The federal court case of Brock v. CarrionLtd. (2004) 332 F.Supp.2d 1320 held that in order to validly pay the resident apartment manager by offering free or reduced rent, there must be a voluntary written agreement between the employer and the resident manager, and that agreement must meet all of the following conditions: (1)The agreement must be in writing; (2) The agreement must specifically state how much money is to be credited against rent; (3) The agreement cannot credit more than the allowable amounts set forth above; and (4) The agreement must specifically say the credit is “being applied toward minimum wage. Failure to follow any steps will void the agreement.  (Id. at 1321.)  A later California case, Von Nothdurft v. Steck (2014) 227 Cal.App.4th 524 (2014) held that “all that is required” for the employer to be able to apply a rent credit “is that the employer and employee voluntarily agree to credit lodging against the employee’s wages.”  Hence, reading these cases together suggests that there needs to be a voluntary written agreement between the employer and the resident manager that states that the employer will credit lodging against the employee’s wages.

In other words, if there is no written agreement that provides that the employer will use a rent credit to cover some of the wages it would otherwise have to pay the employee, then the employer cannot use the rent credit.

4) If the employer cannot use the rent credit (because there is no written agreement, for example), the employer must pay the minimum wage for all of the hours worked by the resident apartment manager.  IF YOU DO NOT HAVE A WRITTEN AGREEMENT TO CREDIT LODGING AGAINST WAGES, THEN CONTACT US IMMEDIATELY, AS YOU MAY BE OWED BACK WAGES AND PENALTIES IN A RESIDENT APARTMENT MANAGER WAGE CLAIM.

For more information about resident managers and rent credits and resident apartment manager wage claims, read these additional articles we have posted on our website:

And feel free to contact Michael A. Strauss or Andrew C. Ellison with your questions about resident apartment manager wage claims.