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Thanks for the response, but California law states that any property with over 16 units must have an employee/manager living on site. As such, living on site is a condition of employment when you are offering a resident manager a job, which further locks me in to IWC Wage Order #5.

Thanks for the reply.

I concluded that you cannot charge full market rent because I read the entire IWC Wage Order #5-2001 (scroll down to Section 10, Meals and Lodging). http://www.dir.ca.gov/IWC/IWCArticle5.html

The link you provided is a recap of this Wage Order.

The following is listed under the listing of amounts to be credited against minimum wage:

(E) If, as a condition of employment, the employee must live at the place of employment or occupy quarters owned or under the control of the employer, then the employer may not charge rent in excess of the values listed herein.

Another property owner that I know provided me with the two scenarios that I listed in my original posting. This is why I am not sure what to do at this point.

Hello All:

I own several multi-family rental properties and have always paid the Resident Manager a salary, including a free apartment.

I have recently acquired a new business partner and we recently purchased a property with 48 units. My partner does not want to give the Manager a free apartment. He wants to charge the Manager full market rent.

I did some research and discovered that the California Industrial Welfare Commission says that a Manager may be charged up to 2/3 the fair market value of the unit but, in no event, shall it be more than $381.20 per month for a single employee or $563.90 for a management team (e.g., husband and wife).

After further research, I discovered that there are actually two (2) exceptions to this rule, which are as follows:

1. Manager must be paid in accordance with state minimum wage requirements for all hours worked. The Owner may deduct up to $381.20 per month as a lodging credit from the Manager's salary, which counts as payment in full for the monthly rent.

2. Manager is paid in accordance with state minimum wage requirements for all hours worked. The Owner pays the Manager by check for all hours worked, and the Manager pays the Owner by a separate check for 2/3 of the fair market value for the apartment.

Does anyone know which of these exceptions is generally followed? I want to ensure that we follow the correct procedure before hiring our new Manager.

Any information that you can share would be greatly appreciated.

Thanks!!