California's highest court keeps labor law alive with implications for resident managers

Rental property owners with resident managers should understand the California Private Attorney Generals Act (PAGA) and that small mistakes can carry big penalties.

California is in an exclusive club. It is the only state that allows employees to essentially be deputized and act as a Private Attorney General to enforce labor code provisions not only on behalf of themselves but also behalf of other aggrieved employees and the State of California.

There is a litany of possible violations employers can make that can embolden workers to commence a PAGA lawsuit. Think break and meal violations, being forced to work off the clock without overtime, not being paid commissions the employer agreed to, or failing to receive a laundry list of information that must be contained in their paystub, etc.

In the long-awaited Adolph v. Uber Technologies case, the California Supreme Court held that a plaintiff whose individual California Private Attorneys General Act (PAGA) claims are compelled to arbitration is not stripped of standing to litigate non-individual claims in court. The impacts of this decision will be felt immediately across the Golden State.

There is some scathing criticism of the law with a ballot measure being brewed up to go before voters in 2024 to reform it. A group representing those in the restaurant business, for one,  is not fond of PAGA.

What does this mean for housing providers with resident managers?

As a refresher, the law requires that there be a responsible person living onsite in an apartment complex with 16 or more units. This can be the landlord, an owner, or a manager employed for this purpose.

"When the number of dwelling units or guest rooms in an apartment house or hotel exceeds 16, a manager, janitor, housekeeper, or other responsible person shall reside upon the premises and shall have charge of the apartment house or hotel."

Cal. Code Regs. Tit. 25, § 42

The practice of law has become very nuanced. Bornstein Law does one thing, and does it very well, and that is managing landlord-tenant relationships. When we begin migrating into other areas of law, we consult other attorneys in their respective areas of expertise. When the topic of PAGA came up in the past, we reached out to Margaret Grover, a seasoned employment attorney.

Some key takeaways from our conversation:

›Resident managers are entitled to minimum wage and tracking their time is a cumbersome but necessary task.

› Partial rent credit cannot be used to satisfy minimum wage obligations

› A free apa›rtment can satisfy the obligation to pay wages, yet the value is limited and several tests must be met.

› There are limits on what the landlord can charge a tenant who is required to live in an apartment as a condition of the job. Documentation is critical for landlords to protect themselves.

› Sick leave presents a major headache for employers, but they must familiarize themselves with the rules.

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Parting thought

The main message we want to sink in is that resident managers are employees and as such, have a bundle of rights. Ignoring them or making missteps will be at the peril of housing providers.

These types of employer-employee relationships cannot be informal but, rather, comes with a host of statutory requirements that must be followed to the letter and best approached with proper counsel.