APARTMENT AS COMPENSATION (W/ VOLUNTARY WRITTEN AGREEMENT) HYPOS

HYPO No. 1

Ray, a resident apartment manager at a 16-unit complex, works about 15-hours a week and is compensated with a "rent free" apartment valued at $1,500. The employer and Ray have a written agreement that states the apartment will count against the employer's minimum wage obligation. Is there a violation?

Answer: Yes!



Rational: The most an employer can credit for lodging against the minimum wage obligation is $351.20 a month. Therefore, despite the value of the apartment, Ray is only receiving $352.20 a month for 64.5 hours of work (15 hours a week x 4.3 weeks per month). That works out to $5.46 an hour, which is less than minimum wage at $6.75.

Note: the most an employee can work receiving lodging alone as compensation is 12-hours a week. The employer is required to compensate the employee at least minimum wage for every hour worked thereafter. See next example.




HYPO No. 2:

Ray, a resident apartment manager at a 16-unit complex, works 30-hours a week and is compensated with a "rent free" apartment. The employer and Ray have a written agreement that states $351.20 for the apartment will be credited towards the employers minimum wage obligation. In addition, the employee will receive $400 a month. Is there a violation?

Answer: Yes!

Rational: An employee should make $870.75 a month if they are working 30-hours a week ($6.75 x 30 hours x 4.3 weeks per month). Here, Ray is only making $351.20 + $400 = $751.20.