Employees and property management company

Started by CaroleS • 22 replies • 1945 views

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CaroleS (Florida)
Posts: 97

Posted:

I am in South Florida. - I have looked at two property management contracts
Both say that while the company will pay benefits and payroll these are employees of the Association
It has always been my understanding that whomever issues the W-2 is the employer.
The last thing our H OA needs is to have employees.
Would someone please explain?

AllisonD (Florida)
Posts: 449

Posted:

There is more to the employer-employee relationship than who issues a W2. If the association tells the pm employees how to do things, when to do them, supplies them with the items needed to get the job done the it may be an employer-employee relationship. Its likely that it is not so with these pm employees because you contract with them to do certain things (accounting for example) but you do not tell them how or when to do these things or provide the tools to get the job done. In fact, they usually have their own software and management tools. I would not sign a contract that has provisions I do not agree with or want.

SusanM22 (Florida)
Posts: 154

Posted:

Are you absolutely sure ? I now the FL community management business fairly well. Is the CAM supposed to work on-site and exclusively for your HOA ? Are you referring to a contractual agreement with an established community association management company or, are you contracting with an "employee leasing" company ?

CaroleS (Florida)
Posts: 97

Posted:

I know what a PEO is this is not a PEO. I have read both property management contracts. There is an on-site property manager. We are a community of 1060 homes in 7H OA's. One is a master H OA the governs the common areas. There is a clubhouse A social director and assistant to the property manager someone who sits at the front desk someone that does repairs around the community. Both contracts are insisting these are H OA employees.. The last thing this board or most boards knows how to do is to manage employees.
Both contracts are saying that any on-site employees excluding the property manager art employees of the Hoa. I say that is ridiculous. Both contracts expect all benefits etc. to be in accordance with those paid by the property management company.
The current property management company treats each individual Corporation like an individual corporation.
The proposed new property management company appears to be ignoring the fact there are seven distinct corporations.
I think that is because of how the master board is trying to negotiate everything without any knowledge of the individual communities.
The new contract for my little HOa does not provide for the services of a property manager.
My board is being told that all salaries are in the master HOa. I say that is bunk.
These employees have to be employees of the property management company and must be managed by the property management company.
Why doesn't the on-site property manager manage all of these people?
The new contract as well as the existing contract are very difficult for the uninitiated nonbusiness type person to understand.
Comments please. I feel certain all of the employees should be employees of the property management company and should be managed by the property management company through the on-site property manager.
The proposed new company is a national company the existing company is a local company we are a 55+ community
The existing company has a lot of the local 55+ communities. The proposed new company claims they have no competition.

In the meantime I have seen the master board and the trial is a week from Monday.. It seems they are accessing for charges on an expired contract. And have ignored the attorneys who have told them that they can't do that.

Thank you everyone

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By CaroleS on 10/26/2013 6:26 PM
I am in South Florida. - I have looked at two property management contracts
Both say that while the company will pay benefits and payroll these are employees of the Association
It has always been my understanding that whomever issues the W-2 is the employer.
The last thing our H OA needs is to have employees.
Would someone please explain?

Whose name and EIN will appear as the employer on the W-2? If it is the association's name and EIN, then the IRS will consider the association as the employer. If it is the management company's name and EIN, then the IRS will consider the property management company as the employer.

Our firm, besides preparing taxes, provides payroll services for other companies, and we prepare and issue the W-2s. But our firm's name and EIN do not appear as the employer on the W-2. The name and EIN of the client company does.

SusanM22 (Florida)
Posts: 154

Posted:

"The new contract as well as the existing contract are very difficult for the uninitiated nonbusiness type person to understand." Well, that is why you hire competent professional advisors to guide you through critical business decisions like this one.

These problems are quite common in Florida. It sounds to me that you have a Master assoc. that pretty much calls all the shots. On the other hand, you have several sub-associations , all incorporated, that may or may not have the authority to intervene as far as management contracts. There could be a legal explanation for these employees to be officially named as employees of the association regardless of who issues their W-2.

There are too many variables in the scenario you describe, including but not limited to, the manner in which both master and subs were created by developer. Sorry, but I think it is impossible to offer any specific or solid guidance let alone opinions without knowing all the facts and circumstances.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

At the end of the day, you can do anything you want illegally. It only becomes a problem when it goes to court. Not saying its good nor bad, its just the way it is.

CaroleS (Florida)
Posts: 97

Posted:

Bruce the Property Management company - is on the W2 - the property management company is also saying that all benefits etc are determined by them and then they want to call these folks hoa employees.

Susan, the master board is trying to call the shots - these are and have been 7 distinct corporations - and, they will remain that way. My question continues to be who are the employees supposed to work for and be managed by - the hoa or the property management company? OR is it a contractual issue?

I am pretty literate as to the articles, by-laws and covenants. I have a lot of experience as a manager in corporate America so I understand clearly the employer/employee relationship. It was drilled in to my head

In my mind the role of an onsite property manager is to manage the property and the staff needed to get the services agreed upon in the contract performed.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

these are and have been 7 distinct corporations - and, they will remain that way. My question continues to be who are the employees supposed to work for and be managed by - the hoa or the property management company? OR is it a contractual issue?

The issue is IRS laws and employment laws. It has little to do with any contracts you may have with them. Contracts are meaningless if your breaking the law.

AllisonD (Florida)
Posts: 449

Posted:

I suspect they are trying to get you to pay for their health insurance.

CaroleS (Florida)
Posts: 97

Posted:

In the new proposed company that is true

SusanM22 (Florida)
Posts: 154

Posted:

Quote:

Posted By CaroleS on 10/27/2013 8:12 AM
In the new proposed company that is true

That may be one reason but you would also have to factor in workers comp. The chain of command should be clearly defined in the contract. An association is run by the elected or appointed BOD who in turn directs and/or instructs the manager.

CaroleS (Florida)
Posts: 97

Posted:

I think using chain of command is appropriate. The contract spent an enormous amount of time talking about insurance and the fact that these are not employees of the property management company. My contention is that all employees should be from the property management company and the property manager on site should manage these on-site employees.. Is that the norm?

SusanM22 (Florida)
Posts: 154

Posted:

There should be job description for the on-site manager, and yes, managers usually supervise staff. As far as the rest I do not know what else to say. It could be a liability issue that the management co. is not willing to bear. Who knows!

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By CaroleS on 10/27/2013 10:11 AM
I think using chain of command is appropriate. The contract spent an enormous amount of time talking about insurance and the fact that these are not employees of the property management company. My contention is that all employees should be from the property management company and the property manager on site should manage these on-site employees.. Is that the norm?

Carole,

Is this a real management company or some fly-by-the-seat-of-your-pants outfit?

In a nutshell:

1. Who hires (and fires) the employees?
2. Whose name appears as the payer on the pay check?
3. Whose name and EIN appear on the employee's W-2?
4. Who pays the employer portion of the FICA and Medicare tax?
5. Who pays the FUTA (unemployment) tax?
6. Who pays for the workers' comp insurance?

If the answer is the management company then there are no two ways about it. The answer is black-and-white. The management company is the employer.

CaroleS (Florida)
Posts: 97

Posted:

These are big companies. One claims to have 6000 employees. As you know, many boards are not terribly business literate. I think it is a snow job. And, I am screaming loudly. Enough with this stuff.
Each contract clearly says other than onsite property manager all employees are of the HOA BUT the property management company pays and does taxes etc under their name -

I guess I am looking for a best practices scenario for a 1060 home Florida community -

To me, it would be functions that the company will perform off site-

Then what the onsite manager will perform including hiring, firing and managing on site employees like the social director, secretary etc.

In my mind I am always thinking tell the company what you want. You pay the company to do it. How is their problem

SusanM22 (Florida)
Posts: 154

Posted:

'In my mind I am always thinking tell the company what you want..."

Precisely. When an association sends out RFPs (request for proposal) for services, management, etc. the association sets its own specifications. In this case, the Master assoc. may have sent RPFs out for bid and the 2 contracts reflect what the Master assoc. had requested.

Yet another scenario could be that these employees are actually being "leased" to the association by the management cies. Under this scenario, all payroll, insurance, workers comp, etc. is channeled through the management co, however the right to hire and fire lies with the Master assoc. BOD.

I once worked for a company in Atlanta and did not find out that I had been actually "leased" to my bosses until I got my first paycheck. It was not disclosed to me at the time of the interview nor when I was asked to start work. Never had any contact with those people until after I quit.

CaroleS (Florida)
Posts: 97

Posted:

They are a property management company not a PEO - I guess what I am hearing is that there is no common practice. If the board wants someone fired they have to tell the property management company

SusanM22 (Florida)
Posts: 154

Posted:

Good luck.

SusanM22 (Florida)
Posts: 154

Posted:

"Please seek appropriate legal or professional counsel before acting on information found at HOATalk.com. "

TimB4 (Tennessee)
Posts: 21,059

Posted:

Carole,

Here is a link to the IRS's webpage about Independent Contractor (Self-Employed) or Employee?

I agree with others. It sounds like the MC's are now trying to defer the affect of any requirements under the health care law to Associations.

The good thing is that contracts can be negotiated.

Simply explain to them that they remove that section out of the contract OR you will simply hire an independent contractor as a property manager.

If you have already signed a contract, you likely do need to seek additional advice from an attorney or tax adviser (perhaps both) to see the implications of having employees. Mind you, as they may not know how the health care act will affect you yet as that seems to be a fluid act that is continually changing.

CaroleS (Florida)
Posts: 97

Posted:

Good point about affordable care act - the one company is demanding $399 per month per employee when of the hoa being paid by the property management company.
Thank you folks - I don't think these are issues that the lawyers would call out - maybe I am wrong

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

the one company is demanding $399 per month per employee when of the hoa being paid by the property management company.

Sounds to me like the property management company, who does this for a living, knows the law better than you. Sure you can contract out someone who works at other associations and stops by yours once and a while too, but expect the level of service between that guy and a full time on site guy to be very different.

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