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In California, housing your on-site manager is not just a perk—but a legal balancing act between landlord and employer obligations.
Providing on-site housing to apartment managers, maintenance workers, and security staff in property management can be a smart operational choice. These employees are often critical to the day-to-day operation of residential buildings, and the convenience of having them live on-site seems like a win-win as having someone live on a property can help a landlord respond to tenant needs quickly, deter vandalism, and reduce turnover.
However, when a property owner or management company provides housing to an employee, it creates a dual legal relationship. You are no longer just an employer. You are also, functionally, a landlord. That dual role brings unique legal obligations and increased exposure under California employment and landlord-tenant laws.
If you manage rental property and provide free or discounted rent to employees, you must approach the arrangement carefully. This article outlines the legal framework and practical guidance to protect your business.
The Housing You Provide Is Considered Compensation
California law treats rent-free or discounted housing that is part of an employee’s compensation as wages. This means you need to handle it carefully. Housing cannot be given informally or deducted from wages without legal guardrails.
You must have a written agreement that spells out the arrangement and documents the employee’s voluntary consent. The unit must meet California’s strict habitability standards, and any valuation for wage credit purposes must not exceed the maximum amounts allowed under the applicable Industrial Welfare Commission (IWC) Wage Order.
If you miss these steps, you could face claims for underpayment, penalties, and even class and/or PAGA litigation. Avoid assumptions—document the value, use the correct wage order, and keep the paperwork current.
Wage Laws Still Apply, Even After Hours
Your live-in apartment manager might handle lockouts or tenant complaints at odd hours. That flexibility may be part of the appeal, but California’s wage-and-hour laws still apply unless the employee qualifies for a specific exemption.
That includes minimum wage, overtime, meal and rest breaks, and accurate timekeeping. You should define expectations clearly and provide tools for tracking time. Any ‘informal’ or undocumented labor opens the door to wage claims. What feels like convenience now could lead to liability later.
Termination Does Not Automatically End the Right to Occupy
Many property owners assume that once an employee is terminated, they must vacate the premises immediately. That is not always true.
Your former employee might have tenant rights under California law, depending on the circumstances. If they refuse to leave, you cannot change the locks or shut off the utilities. You may need to follow formal eviction procedures and adhere to rent control or just-cause rules.
To protect yourself, ensure your housing agreement clearly states that the employee’s right to occupy the unit ends when their employment ends. But even with that clause in place, speak to counsel before taking action. The line between employer and landlord is blurry here; one wrong move can create significant exposure.
You Are Still Responsible for the Housing’s Safety and Habitability
When you provide housing, you take on legal responsibility for its condition. That includes everything from basic utilities to structural integrity.
If the employee suffers an injury due to mold, a broken stairwell, or another issue with the property, you could face both workers’ compensation and premises liability claims. Additionally, failing to maintain safe housing could violate state and local housing codes, triggering regulatory fines.
Routine inspections and prompt repairs are not just good property management, they are your legal obligation when the unit doubles as an employee benefit.
Put It in Writing
Too often, we see disputes arise from handshake agreements or informal deals made when everyone was on good terms. If you provide housing to a staff member, use a written agreement. Spell out the value of the housing, the conditions of occupancy, house rules, and what happens when the employment ends. A few pages of clarity now can save months of headaches later.
Summary
Live-in employees play an important role in many successful property operations, but they also raise unique legal considerations. At Kirk & Simas, our attorneys help California property owners and managers navigate housing arrangements, wage compliance, and risk management strategies with clarity and confidence. To discuss your specific situation, please call our office at (805) 934-4600 to schedule a consultation.
This is usually Wage Order 5 for residential property services, but I think it’s probably better to leave that out and avoid giving specific legal advice