Board members also paid employees

we have 2 members of our board that are also being paid. One is the office manager and the other is our cleaning service. This has been allowed by our previous board but the 2 new members, myself included, want this to change. It does go against our by laws. When we have tried to discuss this it has been met with arguments of course. We are a board of 5 and the fifth was a write in vote and a close personal friend of office manager so it is 3 against 2. It has caused many issues as the manager , also our Vice President, continues to make it difficult for me, the new treasure, to even see the finances. The past treasurer was a hands off treasurer and everything was left to the office manager to do. this needs to change so I am asking anyone for advice on how to make this board follow our bylaws!

Kim,

One thing to remember is that an individual who is serving as PM or providing services to the Association and has also been elected as a Director may be paid for the PM or other services that they provide. I don't think it's appropriate to have that situation, however, it is legal.

My suggestion would be to look at the contracts and see when they are up for renewal. Then bid them out to see if you are getting good service for a fair price. Of course, the individual/s who are providing the services should be disqualified to vote or participate in the process as it would be a conflict of interest.

In our by laws it states "Council members may not be employees of the association during their term of office." Both their terms are for one more year and when this was brought up the one who runs the office said she would not run again. However the President is the one who says he will remain and will continue to do the cleaning. As for a contract that is another thing that even though we have asked numerous time has yet to be produced.

Would like to know more about nature of relationship (written contract or not), how renewed, and whether payments are made to a real business entity with other clients or to the individuals.

But with the info provided, I have the following recommendation:

Make a motion that a new vote be taken on the manager and cleaning relationships. Demand that no board member who has a vested interest in the outcome of your motion can vote on anything having to do with this motion or any related motion/vote. Since the manager/director and the cleaner/director both have a vested interest in preserving their own and each other's relationship, only 3 board members would be eligible to vote - The 2 new members and the passive participant. 3 votes satisfies quorum requirements on a 5 member board. 2 votes out of 3 passes this motion and any subsequent motions/votes on the subject.

If the current majority objects, demand that the question should be put to your HOA attorney. When they object, don't back down.

Glass will get broken, but you will get your issue to the table. Only you can decide if it's worth doing on this particular issue.

Thank you! At our next meeting I am going to insist on seeing the contracts,all of them, to see which ones need renewing. We have discussed getting bids when contracts are up and of course they actually asked us why we would want to do that! But I am not backing down on that. Our home owners deserve and expect us to do the best for them.

Kim,

When you ask to see the contracts, do so as your position of Treasurer, rather than having it appear as a witch hunt.

Simply say that as Treasurer you need a copy of the contracts to ensure payments are made according to the terms of the contract.

Additionally, if the individuals are independent contractors, rather than service companies, you will also need their EIN or SSN to issue 1099-misc (which need to be issued soon). The software and forms are available at your office supply stores.

That's why the Association is supposed to issue 1099-misc forms to independent contractors and W-2s to employees.

To avoid that scenario combine into one motion of two entities violating bylaws. Both entities would be excluded. I agree with NpS if separated due to same circumstance situation neither should vote. They would not be able to justify having any right to cast a vote.