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Court Finds Resident Adviser Housing Does Not Qualify for Wage Credits

A company that operates apartment buildings for college students will pay $800,000 to settle claims by a class of 184 resident advisers in California.

The lawsuit alleged the students received compensation in the form of free lodging, which does not satisfy minimum wage obligations in violation of the Fair Labor Standards Act (FLSA) and the California labor code.

Class members reportedly received payments based on the number of weeks they worked as resident advisers. The average amount is $2,500, according to the agreement.

All class members are guaranteed a $100 minimum distribution.

The four representative plaintiffs will receive enhancement awards of either $4,000 or $8,000, in addition to the amount they are entitled to as class members.

Additionally, the agreement designates $5,000 to be paid to the California Labor and Workforce Development Agency as state labor code penalties. The company will pay both sides’ costs to litigate the case under the terms of the settlement agreement.

Credit Toward Wages for Housing

The FLSA permits an employer to count the value of housing it provides as part of the wages it pays if certain requirements are satisfied. The U.S. Department of Labor recently issued guidance explaining the rules for the credit.

Under DOL’s regulations, an employer who wishes to claim credit towards wages for providing lodging must ensure that the following five requirements are met:

  • The lodging is regularly provided by the employer or similar employers. Because live-in domestic service employees, for example, often reside at their employers’ private homes without paying rent, this requirement is met for those workers. Similarly, agricultural workers are often provided housing during the harvest season by their employers, so this requirement is met for workers under those circumstances as well.
  • The employee voluntarily accepts the lodging. Lodging is considered as voluntarily accepted by the employee when living at or near the worksite is necessary to performing the job. For example, this requirement is typically met when a live-in domestic service employee and the employer have an understanding that the employee will live on the premises as a condition of employment, or when an apartment complex provides a free apartment to the complex manager. In other circumstances, a written agreement stating that the employee voluntarily agreed to live in a residence provided by the employer may be sufficient.
  • The lodging is furnished in compliance with applicable federal, state, or local law. For example, the credit will not be honored if the lodging provided does not have or has been denied a required occupancy permit or is not zoned for residential use.
  • The lodging is provided primarily for the benefit of the employee rather than the employer. Lodging is ordinarily presumed to be for the primary benefit and convenience of the employee. This presumption is rebutted in circumstances in which lodging is of little benefit to employees, such as where an employer requires an employee to live on the employer’s premises to meet some need of the employer. In particular, an employer may not claim the credit if the employer requires the employee to leave an existing home and live on the employer’s premises to be on-call to meet the needs of the employer.
  • The employer maintains accurate records of the costs incurred in furnishing the lodging. Records could include proof of mortgage or rental payments and utility bills.

You should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page if you feel that you and and other employees have a valid claim under FLSA and believe that your wage rights are being violated.

Our top-rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today.

 

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