HOA having its own employees?

Started by JoshS3 • 11 replies • 2019 views

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JoshS3 (Utah)
Posts: 1

Posted:

Our community has 172 units. Our current management company is raping us of funds. The management company has an employee come out to do some of the minor jobs around like picking up trash and we are charged $45/hour for his labor. They want to raise the fee to $60/hour come January. The board is thinking of hiring our own employee to do these small types of jobs, but one board member thinks it is illegal for us to have our own employee. Does anyone else have employees? What are the pros and cons? How do we not get raped by the management company?

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Josh, great question.

I know of nothing that would prohibit you from hiring an employee. However, if you do so, you will have to withhold taxes and pay attention to federal and state employment laws. Probably not a good idea. And somebody would have to supervise.

Look around for a company that does property maintenance for apartment complexes. Not a property management company, but one that makes small repairs, etc. You will probably get a much better deal from them. And you may work out just on-call, as needed services, rather than scheduled maintenance, saving you money.

I would suggest that you do everything you can to contract out the services rather than get involved in hiring a person.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

George offers good advice here. Much easier to simply contract with an as-needed vendor.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Josh,

George forgot to mention that an employee can be hired as contract labor and payroll taxes are not taken out of his "salary". At the end of the year a 1099 is issued to the employee. If you have employees on a payroll as George has suggested at the end of the year a W2 must be issued to each employee and also payroll taxes are paid to the Fed. Gov. throughout the year. Having employees on a payroll is a lot of work. IMO, either hiring a licensed contractor or just hiring a person as contract labor would be much simpler.

PeterB1 (Florida)
Posts: 257

Posted:

Another option (which we use) is to hire an employee and have the payroll administered thru a payroll company (like ADP or Paychex). Most of the administration goes away from you, but the employee is yours - for better or for worse. We do this for our security guards.

SusannaM (Florida)
Posts: 366

Posted:

Peter, how do you deal with workers comp ? In FL is almost impossible to get it for just one employee unless you "lease" the worker.

AnnaA (California)
Posts: 15

Posted:

Why not start a committee to pick up trash etc. Do you have an active membership? If so, start a clean up committee. Start a group, it is great to get together and get some excerise. If you don't have an active community, then hire a licensed handyman that carries liability insurance that will do jobs for you has needed. In this economy you may find someone who will agree to do the small jobs for $35.00 an hour, but you should get a bid for the jobs before giving him an ok or it could take more hours than needed.

JonD1
Posts: 2,350

Posted:

Josh:

Our property has 132 units.

Our maintenance man used to be provided by the former management company.

At the hourly rate to change a simple light bulb was costing us $37.50 in labor.

When we brought up the possibility of hiring a person directly the mangement company told us it wasn't possible.

The Board decided to go forward despite those opinions of the MC.

Our maintenance man has worked for us since then.
The managment company has since been replaced.

We were able to find someone at less than 1/2 the hourly rate we were previously paying.

Payroll is taken care of through Paychex, simply call in the time each pay period, they do the rest.

The accountant who prepares our annual audit handles the tax preparations and any other necessary paperwork.

Once you get the system set in place rather simple.

I would think you could reduce your costs drastically from the new $60 per hour rate.

You certainly do have options.

PeterB1 (Florida)
Posts: 257

Posted:

First my disclaimer: 10 years ago, I worked for a payroll services company.

Either of the companies I mentioned will deal with taxes, benefits, and insurance. All we get is a bill!

We fax in 'timesheets' to the company and they prepare the payroll. We get detailed information on our costs and thru electronic funds transfer, we pay the company.

We are a 120 home HOA with 4 employees.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By PeterB1 on 11/07/2008 4:50 AM
First my disclaimer: 10 years ago, I worked for a payroll services company.

Either of the companies I mentioned will deal with taxes, benefits, and insurance. All we get is a bill!

We fax in 'timesheets' to the company and they prepare the payroll. We get detailed information on our costs and thru electronic funds transfer, we pay the company.

We are a 120 home HOA with 4 employees.

A payroll service is a great way to go. What does such a service cost?

I am curious as to the job functions of each of your 4 employees. Also, how are they supervised?

If there is an easy way for homeowners associations to hire and supervise employees, many may do it.

Tell us about the process and your experience.

PeterB1 (Florida)
Posts: 257

Posted:

George,

Looking at the cost in the simplest way, we pay about $40 per week, per employee for the service.Checks (or direct deposit are delivered bi-weekly)

All 4 are security guards, one being the supervisor. The supervisor sets work schedules, prepares payroll info (which is signed off by a Board member), and deals with daily activities.

Security payroll is our largest budget expense (our residents want it and we are increasing security to 24/7. We got quotes from service type companies (you know the names) and they were VERY much more.

It would seem that anyone with a significant line item budget expense would put the service out for bids. One 'bid' would be to consult with a payroll service company. You might be surprised!

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Thanks, Peter. That sounds very workable for a lot of associations. You may have hit on something here.

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