California Community Associations are Increasingly a Target for Wage & Hour Lawsuits

By Sandra L. Gottlieb, Managing Partner at SwedelsonGottlieb, Community Association Attorneys


Wage & hour lawsuits are being filed with increasing regularity, and community associations, as employers, are not exempt. Unfortunately, some of our association clients have already been sued on wage and hour claims, and it appears that the risk of the association employer being sued for these claims is greater than ever.

What can you do to not be a target for litigation? Start by evaluating your association’s pay practices.

Every community association that has employees should know (or should quickly find out) the answers to the following questions:

Is the association paying every non-exempt employee at least the minimum wage?

The current federal Fair Labor Standards Act hourly rate is $7.25 an hour. However, since states can have more restrictive pay practices than is required at the federal level, the minimum wage in California of $8.00 an hour is controlling. And note that California’s hourly minimum wage will increase to $9 per hour effective July 1st of 2014.

Is the association paying every non-exempt employee the required overtime wages?

Overtime is due to any non-exempt employee for hours worked in excess of 8 in any work day and in excess of 40 hours worked in any work week. Managers and board members need to determine whether all overtime hours are being identified and lawfully compensated as overtime (we have found that this is not always the case). When evaluating this issue, consider work performed at different locations or in different jobs, or what is often called “comp time” hours, etc. Association boards and/or management will also need to evaluate whether many kinds of payments for work are properly included in computing overtime wages, including bonuses, if related to the hourly pay rate, on-call pay, and other incentives.

Is the association adding deductions that are unlawfully cutting into the minimum wage or overtime compensation?

Association boards and management should review and determine whether the association is making any pay deductions that unlawfully reduce a non-exempt employee’s pay to below the required minimum wage or appropriate overtime compensation. For example, what about the cost of required uniforms (remember, if required, the employer must pay for their cleaning without offset), or the value of lost or damaged tools or equipment (never subtract the cost for these items from a final paycheck even if your employee handbook states you may do so).

Are the association’s non-exempt employees accurately recording all their worktime?

The association’s board and management need to evaluate and confirm they have identified all activities qualifying as compensable work time. As an employer, the association should ensure that it has in place a reliable, well-understood, fully functioning, and enforced system that is accurately capturing and preserving all hours worked. For example, are employees keeping track of all work performed (other than for a minute or two answering a text or email) outside of “official” shift times or schedules, compensable time spent in required training or in meetings, approved work done at home, etc.? Does management periodically check, as in weekly, to see whether time records appear to be accurate? Does the employee sign their time sheet confirming the accuracy of their own record keeping? This is one of the best tools available to defend a wage & hour claim.

Is your association prepared to prove that each employee treated as exempt actually meets each exemption requirement?

In order to evaluate exemption, management must be familiar with (or confer with legal counsel to confirm) the criteria for defining who is and is not properly treated as an exempt employee.

Do employees the association considers to be non-employees really fit that status?

We know that many associations are incorrectly treating some employees as independent contractors, thinking that this benefits the employee and is no harm to the association. Wrong! Erroneously treating an employee as an independent contractor (and not being subject to any wage & hour requirements) is a sure fire way to embroil the association in a wage & hour claim. That practice also exposes the association to an investigation by the state and federal governments, as in the IRS, for the non-payment of employment taxes. Follow this link to a prior blog post regarding willful misclassification of employees.

These questions might at first seem to be straightforward and uncomplicated. Do not be deceived. The reality is that the answers are by no means simple, unambiguous, or clear-cut. And knowing the law is different than complying with the law. Ignoring compliance questions, or doing nothing to find out whether there are any, is a perilous course in today’s wage & hour environment.

Sandra Gottlieb is a community association attorney and managing partner at SwedelsonGottlieb. She brings her years of labor and employment law expertise to benefit our association clients who are employers. Sandra can be contacted via email:

Contact Information