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Tricky compensation arrangements are not a do-it-yourself project

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in Employment Law,Human Resources

If you are tempted to use obscure provisions of California’s labor and employment laws to pay your employees, make sure you (and your attorney) pay close attention to the details.

Recent case: The owner of a 33-unit apartment complex in Hollywood hired Andrew to be a live-in assistant manager.

Instead of paying wages, the owner gave Andrew a credit against his rent. The manager told Andrew his duties would involve cleaning and security. For this, he was to receive a $200 credit off of his monthly rent of $675.

The sole memorialization of this arrangement was the first page of a standard form entitled “Apartment House Lease,” which granted Andrew a one-year lease at $675 per month, with a handwritten and initialed notation: “$200.00 off for Assit [sic] manager duties. Making it $475.00.”  

Later, Andrew was promoted to manager and received a total rent reduction, an arrangement that was not put in writing.

Years later, Andrew was injured while chasing a vagrant off the premises. He moved out and sued the owner for violations of the minimum wage law.

The owner argued that Andrew had been compensated via the rent credit under Industrial Welfare Commission wage order No. 5-2001.

The court rejected that argument because that offset requires a “voluntary written agreement. The note on the lease wasn’t good enough. (Rolfs v. Mei, No. B266929, Court of Appeals of California, 2016)

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