APARTMENTS AS COMPENSATION (W/O VOLUNTARY WRITTEN AGREEMENT)


HYPO No. 1

Ray, a resident apartment manager at a 16-unit complex, works 12-hours a week and is compensated with a "rent free" apartment that is valued over $1,000 a month. The employer and Ray keep things pretty simple, no writings, no contracts, just 12-hours a week in exchange for a free apartment. Is there a violation?

Answer: Yes!

Rational: Without a "voluntary written agreement" the employer is barred from crediting lodging from his minimum wage requirement, regardless of how much the apartment is worth or how little the employ is working. Thus, the effect is that Ray is working 12-hours a week for free, which is a direct violation of the Labor Code.



HYPO No. 2

Ray, a resident apartment manager at a 16-unit complex, works 20-hours a week. The employer and Ray have a written agreement that states Ray will receive $351.20 in compensation for an apartment, which is worth $500 a month, and, in addition, Ray will receive $400 a month. Is there a minium wage violation?

Answer: Yes!

Rational: A "voluntary written agreement" must specifically state that the value of the lodging will be credited against the employers "minimum wage" obligation. Sometimes, a written agreement will be valid in all aspects but will not have the words "minimum wage" thus invalidating the agreement. That is the problem here. Had the agreement said "Ray will receive $351.20 against the minimum wage obligation for an apartment ..." then the agreement would have been valid. The effect is that the $400 is the only compensation for 86 hours of work, or $4.65 an hour.

 
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