 Good afternoon everybody. Thank you for joining us today. I hope you guys all had a great Cinco de Mayo yesterday. I'm your host for Condo Insider. Today with me is John Canorek with Turtles and Cats, Heather Singh, Harris and Canorek, tongue twister. Thank you for joining me with me today, John. I'm so happy to have you here. We're going to talk about Hawaii Labor Law and how it applies to condos and their employees, right? I'm happy to do so. Glad to be here. Great. So we're going to start off with what is the pre-hiring process and also including the background checks that now that are able to be done? Sure. I think every condominium association wants to hire the best possible candidate for whatever position and we'll talk about resident manager mostly. So when you're hiring your resident manager, you want to make sure that person has all the skills and experience that you expect for the kind of property that you're charged with managing and caring for. So one thing that we always recommend is a criminal background check on applicants for resident manager. That would go into their prior court records. Now, Hawaii is unique among states in that we do prohibit consideration of arrest and court record for applicants for employment except there is an exception and the exception says you can rely on confelony convictions within the last seven years and misdemeanor convictions within the last five years. And generally, Hawaii employers are not permitted to even look into that background until a bona fide offer of employment has been made. Once a bona fide offer has been made, you can do a criminal background check, rely on convictions only within those periods of time for felonies and misdemeanors and then you have to show that that conviction is rationally related to the job duties of the position. Now that's the general rule and so that would apply to all businesses in Hawaii unless you enjoy a special exception and condominium associations and cooperatives have an exception. The exception allows condominiums and co-ops to do a pre-offer criminal background check without regard to the seven and five-year time limit and that would allow condos and co-ops to do that background check without regard to the time limits on convictions but only for certain positions. The positions that are exempt that you can do a pre-offer background check without regard to the seven and five-year limitation are resident manager, resident manager security guards and employees that have access to the funds of the association or the keys to the units of owners or access to the units of owners. So those categories, so your regular landscaper or gardener would not fall into that exemption and you would have to wait to do a background check till after an offer of employment has been made and limited to the seven and five-year period but for resident manager and security guards you can do a pre-offer background check without regard to the seven and five-year limitation but in both cases that offends whatever the conviction is has to be rationally related to their job duties. I'll tell you a quick story. The Hawaii Supreme Court in 2015 had a case involving a young man from Hilo, Zach Shamosi who got convicted of trafficking and metrystallomethamphetamine with his high school buddies. He went to jail for three years but when he was in jail he studied to get an associate's degree and started training to become a radiology technician. He got out after three years and applied to Hilo Medical Center to be a radiology technician. Long story short they said Zach, sorry you've got a criminal conviction for drug offenses. We're at hospital, we have a pharmacy, there are drugs in every patient's room. Your conviction we think is rationally related to the duties of a radiology technician in our hospital and he didn't like that decision so he filed a discrimination claim with the Hawaii Civil Rights Commission which enforces that arrest and court record prohibition. They dismissed his claim saying it wasn't valid. He wanted to sue. You have 90 days to sue after the commission dismisses your claim. No attorney would take his case so he figured out how to file an appeal on his own. He went before a state court judge and the state court judge said Zach you know you've really cleaned your act up, you've got your associate's degree, you should be proud of yourself but the hospital has a point. They have drugs everywhere and you have a drug conviction. Your offense is rationally related to the job of a radiology technician. You lose, case dismissed. He wasn't satisfied. He wanted to appeal it to the Hawaii Supreme Court. No attorney would take his case. He did it on his own. He got before the Hawaii Supreme Court and the Hawaii Supreme Court reversed. They said being a radiology technician does not require him to handle or disseminate drugs in the hospital. The pharmacy is under lock and key and the hospital doesn't restrict visitors who have drug convictions so it's not rationally related. So we now have a very narrow view of what rationally related means. You have to show that the offense is related to their actual job duties and if not you can't rely on it and that would apply to resident managers security guards as well. Wow, wow. Okay so on criminal background checks do they just check state or do they check federal as well? You're going to have to work with your property management company or whoever you use to help you with hiring to do that. There are different methods of doing that. You can hire an outside company to do those background checks. If you do that you have to comply with something called the Fair Credit Reporting Act which requires notice to the applicant that you're going to do a background check and an opportunity for them to correct anything that they think is a misrepresentation or incorrect in that background report. If you do it yourself, if the employer does it themselves there are two data sources locally that you can use. The Hawaii Criminal Justice Data Center and Hawaii State Judiciary have websites that you can search anybody's name and get their Hawaii criminal conviction history. There's also a federal database that you have to pay a little bit to use. It's not very expensive. It's called PACER and it will search for federal criminal offenses. Now it's important to keep in mind that a lot of our applicants didn't live in Hawaii their whole life and if they recently moved here you're going to want to figure out how to do a criminal background check in the state that they came from. Okay. Wow. That was a lot of information. That was good. Thanks. There's other things to keep in mind besides criminal record. You want to make sure that their references all respond. Years ago I had a case where an applicant for a resident manager position had his brother pretend to be a prior employer and say, oh yeah, he worked for me and his brother actually was covering for him. He had been in federal prison for drug defense. He was working. So be careful on that. And in this day and age we're looking at things like COVID, right? We want to make sure that the applicants are healthy and not infected. So you can do a test. You can require applicants to be COVID tested. So that's another option. Okay. So you go through the background checks and they're hired. Who actually becomes the employer? The managing agent or the association? Well, every employment law has a slightly different standard for who's the employee or an employer. And a lot of it has to do with control. Who is controlling the employees' activities or directing them? In many cases, the association retains a management company to help them manage the resident manager. And so in the agreement, in your property management agreement, there may be a provision that says, we will supervise your resident manager, but you association are the employer. That's nice, but it may not even prevent the management company from being deemed a co-employer of the employee. So they both may be employers of the employee. That's why in most cases, both the management company and the association are named in insurance, employment practices, insurance policies is both being covered. Okay. Okay, that's good to know. Okay. So I know there's like labor law postage requirements, the posters. Oh, yes. So they would have to be posted on site, right? Yes, yes. Almost all the laws require that a poster that reflects like minimum wage and safety issues and discrimination laws, temporary disability, workers' compensation, all those posters must be posted, physically posted, in a place that's a conspicuous place where all employees can readily see and read it. Okay. So that means you can't put it in a corner someplace back in the day. And maybe not even in the resident manager's office. Where do employees punch in? Where do employees eat lunch? Where do employees come into the building? So you want to put it in a conspicuous place where all employees can see it, not just some. And if employees report to different places, then you might have to post in several places. Okay. So like one thing, if like you have a one person shop or one person, you know, I guess one of the best places to put is in their storage room where they got to go in daily to get out there. If employees all gather there or have to go there to get equipment or to sign in for the day or whatever it might be, yes, that would be an appropriate place. But there's only one of the laws allows you to electronically disseminate it. It's called USERA. It's the Uniform Services Employee Rights and Reemployment Act. And it's a federal law that applies to all employers regardless of size. And it requires that businesses grant leave to employees who decide or go into the Uniform Services, Army, Navy, you know, Coast Guard, all that kind of stuff, and guaranteed reinstatement rights. Okay. So one of the most frequently asked questions that I get from a lot of people is on compensation. Because basically a lot of resident managers or even GMs are like 24-7. So how does it happen when, you know, they're getting close to their 40-hour work week, but then all of a sudden there's like this big disaster happens. There's a fire or a big plumbing leak. So now they're going to remain on site for an extended period of time to deal with that issue. So how do you work that, you know? So the first thing you want to figure out is whether the employee is exempt from overtime or not. The exempt status for Hawaii wage in our law only means that you guarantee them a salary of at least $2,000 a month. So that's pretty easy. Most resident managers are making at least that. However, if the association has the budget of over a half a million dollars, they're covered by federal law as well. And even if they're not, it's possible that the individual employee who may be going to Costco to buy supplies is individually covered by federal law, even if the condominium association is not. So federal law more likely than not will apply to every condominium association in Hawaii, at least to most of their employees. That means that you have to meet one of three major exceptions to get what they call the white-power exceptions to make them exempt from overtime. The three are executive, administrative, or professional employee. It's unlikely that a resident manager would be exempt as an administrative employee or a professional employee under the way of the law is written. Most of the time, they would have to meet the executive exemption. However, many properties only have one or two employees, and you will not meet the executive exemption unless your resident manager supervises two or more full-time employees. And he also has to have the authority to hire and fire or effectively recommend hiring and firing of those employees. So without many of the smaller associations, 15, 20 years ago, under prior law, would have a single resident manager who was exempt from overtime because the law changed in the late 80s. And we used to have something called a sole charge exemption that said, if somebody's the only employee and they're completely in charge of a property or a business, then they're exempt. That doesn't exist anymore. And so a lot of smaller properties cannot treat their resident manager as exempt and they're entitled to overtime. But if you can get them exempt as an executive, that avoids the whole issue of how many hours they work because as an exempt employee, you work as many hours as you have to work to do the job. If you're not exempt, either because you don't meet the exemption or the company decides just to pay you by the hour rather than salary you, then you have to track all-time work, which means if I'm getting close to 40 hours and there's a death disaster on the weekend and I have to work another 10 hours, that's Saturday and Sunday, and I've worked 50 hours in a week. And anything over 40 hours in a week has to be compensated at a premium. That premium is an extra 50%. So if my regular rate of pay is $20 an hour, then I get an extra 10 bucks an hour for those last 10 hours I worked over 40. And that's how overtime works. One of the things that I complicated even further is if an employer does provide any kind of bonuses for performance, those bonuses have to be calculated back into the hourly rate to calculate the overtime premium. So you have to be kind of careful about creating some kind of incentive compensation for performance because that would go back into the overtime premium calculation for non-exempt employees. You don't have to worry about it for exempt employees. So most businesses try to figure out a way to salary and exempt their resident managers. And if not, you're going to really restrict how many hours they're working to under 40 so that when they do have to get somebody's keys or shut off the water or call the fire department, they're not exceeding 40 hours in a week. So really it would be good practice for all everybody concerned is for that. And I feel it's just good practice anyways to really document like a daily journal of what they've done. Yeah, and that's fine whether you're exempt or not. You can have resident managers keep a log or report on what they're doing on a daily basis, what time they're in the office, what time they're on a run to get something. You can have them do that. It's humbug. They don't like it. But oftentimes boards are not sure what the resident manager is really doing, either because they don't know where he's at or you might not live on property and be an owner and a board member. And you want to see what they do and have them report at a board meeting what they've been doing. So there's nothing wrong with that. I think that's very helpful to understand what your resident managers activities have been. Yeah, and I can get kind of supports like, you know, you get the mileage reimbursement, like how many times do you need to go to Home Depot? That's right. How long did it take you to go to Home Depot? And what did you get? I don't see any of your reimbursement receipts. I just see mileage for Home Depot, but what did you buy? That's right. That's right. I think it's a two-way checks and balance kind of a thing for the blue mark. So say they've hit the 40-hour mark, like how do you start calculating the overtime? You get your regular rate of pay plus the premium of 50% of that rate of pay for every hour over 40. Time and a half. Time and a half. Now, if you're exempt, you don't have to worry about that. But there's a problem arises when associations think that they can grant comp time. There is no such thing as comp time. It is not legal. It's not permissible under wage and hour law. You must pay time and a half for non-exempt employees that work over 40 hours a week. What you can do legally is if an employee works 50 hours in week one within that same period of pay period of time, you can give him, you can pay him his straight time wages for that week, provided he only worked 25 hours the next week and gets his full weekly salary or full of the pay. So you can give in the same pay period, in the next work week, everything under wage and hour law is defined by work weeks. Employers get to set whatever seven consecutive day period they want to set for the purposes of calculating overtime. That's called the work week. That work week then becomes the measure of when you owe somebody overtime. Okay. And if you owe somebody overtime in one week, you can give them time and a half off in the following week within that pay period to offset the overtime. So if they don't work time and a half, they're actually getting paid for all the time they work. Okay. Okay. But that's very complicated and it really leads to a lot of mistakes. And then it gets people saying, well, I didn't get to take my time off. Now I want to use it next week. And oftentimes you'll see resident managers who keep a little piece of paper, a paper book under in their back pocket, tracking all the time they really work and come to, if there's ever a disagreement with the employer, they turn that book in and they say, well, I've been working 50 hours a week for the last two years, you owe me 10 hours of overtime for the last two years. And then it becomes a mess. So it's really important to, number one, understand when you hire somebody, whether they're going to be exempt or not, and make sure if they're not exempt, you're monitoring how much time they're working. Okay. Okay. Cool. What is Hawaii's current hourly rate? I mean, I lost track. Yeah. The minimum wage right now in Hawaii, and it's been this way since January one of 2018 is 10, 10 an hour, 10 dollars and 10 cents an hour. There were efforts to raise it to 12. There are going to be efforts to raise it to 15. They died this year in the legislature, but they'll come back. They'll come back. You seem to come back. Yeah. Yeah. So that, it's 10, 10 now. Okay. So to me, it's a standard business practice to have an employee, a written employee policy or employee handbook. Yeah. I think even if you only have one employee, it's helpful to have a document that defines what your rules are, defines what your vacation and sick pay are, define and provide certain CYA policies, if I can use that term, in that it'll say if you believe you're being discriminated against or harassed, this is who you're reported to. If you feel threatened or subjected to some kind of violence, this is who you reported to there. So you want a discrimination policy, a harassment policy, a workplace violence policy. You probably want to include some other kind of policies that relate to time off, working hours, what your work week is. Most of the property management companies have model employee handbooks, some I've reviewed. The problem comes in when an association board thinks they know better than the property management company and starts modifying those policies and rules because they've come from government or they've come from the military and they think they, there are more things that they should have in there or less things. And then it gets, then it gets complicated and any modification to those model policies should be reviewed by outside counsel. We live in a very litigious society, I have to tell you, since COVID began, the litigation world has boomed. The employees are buying claims all the time now. And it's, and I thought it would be the opposite, but it's not. And so just to digress a little bit, we live in an at will state, but people have a misunderstanding of what at will means. At will just means there's no contractual limitation on your right to let somebody go. In addition to contractual rights, employees have statutory rights under all the discrimination laws and they cannot waive them. At will does not affect the right of an employee to sue you for discrimination or harassment or retaliation in violation of public policy or for whistleblowing. So you have to be careful not to fall into a trap of thinking just because you're at will, I can fire you for any reason. You cannot. Oh, okay. Good to know. Okay. And so your policy will say you're employed at will. And we can let you go at any time, except for an illegal reason. Right. Yeah. So it should really spill it out. So everybody's got a clear understanding. So you could actually take a generic managing agent's employee policy and it could actually add things because it might be specific to their property. Absolutely. Yeah, you would. You would. You would add those things. And Hawaii law, by the way, requires that you inform an employee in writing what your sick leave and vacation policies are or PTO if you go to a combined kind of program. So and you have to inform them in advance of any change in those policies in writing. So the Hawaii law does not mandate any amount of sick leave or vacation, but whatever the employer's policy is has to be in writing and has to be given to the employee in advance of any change to. Okay. So you mentioned the acronym PTO. So that's paid time off. A time off, which just sort of combined sort of combines vacation and sick leave into one pot and doesn't really regulate whether you're sick or just taking the day off. Okay. Okay. So we covered vacations and sick leave so the board can establish what they're willing to provide or compensate them for vacate. Is there a standard though, like for vacations and sick leave? It varies. It really varies based on the needs of the association and the kind of expectations of the candidates. So you'll find that in some of the larger condominiums that have pretty highly paid resident managers, you might see a bigger amount of vacation to start. Smaller properties that need somebody there all the time have shorter durations of vacation allowance. Some don't allow vacation until after you've served a year, been employed a year, and some start at one week, some start at two weeks, and then you might get an extra week every few years or at five years or 10 years. Just kind of depends on the property and how they want to treat your employees. That's really up to the discretion of the board. Okay. Sick leave, sick leave varies six to 12 days a year seems to be the span and norm. So there's really no like like law for saying that that doesn't date how much to leave or pay vacation. Nope. There is no mandated law. We do have something called temporary disability insurance in Hawaii that requires every employer is required to carry that for their employees. What it does is it provides a form of sick leave. The statutory benefit is 58% of your regular wage is up to a state maximum that begins on the eighth day of disability and can last up to 26 weeks. Okay. Okay. So one of the big questions I get also besides companies is pay raises. Sure. Well, let's start with how you set a pay scale. I think the board should think about the position and what is it worth? What is it worth to pay somebody to do this job? And the reason I say it, think about the job, not the person, is because you don't want to be accused of changing the rate of pay because this is a woman or this person didn't have the experience you want, whatever it is. What's the job worth to do? And if you're going to hire somebody to do that job, you pay them what the job is worth and that avoids some of the discrimination claims. In addition, when you're hiring, it is illegal now in Hawaii to ask somebody how much they're making at their current job. You can ask an applicant what their salary expectations are, but not how much they've made in their prior job. If they volunteer it and tell you it's not illegal to know it, use it, but you can't ask. So once you set that compensation for a start, I think it's good to stick to it unless the person really doesn't have the qualifications for the position, then you might begin a negotiation or lower what you think the job is worth. But in terms of rewarding an employee once they start, some businesses offer a certain starting salary and say, we'll review your performance in six months and you'll get a little kicker at the end of six months if you're performing well. So it's kind of like an introductory period where you're reviewed. I don't like to use the term probationary period anymore. It has some legal implications. So we just call it an introductory period and performance evaluations I think should be keyed towards goals of the association. I like associations, boards that take the time to sit down with a resident manager and say, look, this coming year we really want you to focus on the key fob rotation system or we want to really do an inventory of our tools. We've got this major balding project that we need you to manage and based on your performance on these major projects, we'll give you a raise and maybe a bonus. So they're going to have a yearly to-do list. I think what's important is for the board to talk about what they want to have the resident manager do and then have a conversation with the resident manager and document. In addition to your regular job duties, these are things we want to see you do in the coming year and then measure them against that performance. Okay, cool. Okay. One question that came to mind and this has to do with the hiring part. Can you call a former employer for a reference check? Yes, you can call former employers for reference check and I recommend that you call every single one of them and I'm a real hard guy about this. I tell my clients, you tell the applicant that if the prior employer won't give you them a reference, you're not going to consider them. We live in this world where everybody's afraid of a defamation claim. There are good laws that protect prior employers sharing information about their former employees. A potential employer has a reason to know whether that applicant was a bad seed and did a lousy job or hurt somebody or sexually harass somebody and you should know that before you hire them. So I tell my clients that if a former employer won't give that employee a decent reference, then there might be something wrong. They're passed on them and go to the next guy. Because I think I've heard some people say that when someone calls for a reference, they'll either go not rehireable or is rehireable, can be rehired. That's a very good question to ask. So many employers will just say it's our policy not to provide full references. We only confirm position held and dates of employment. And you can't ask salary anymore, right? So it's just position held and dates of employment. And if they won't answer anything, the one question you want to ask is what you just said, are they rehireable? That'll give you a pretty good idea of how they perform. That'll be the major red flag. What other things can you share with us? Because you've been in the business for so long. So what other horror stories can you share with us to make sure you don't do? Oh, boy. I think if you don't pay attention to the performance of your resident manager, things can get out of whack and a new board is going to be saddled with a poor performer with no record of discipline or no record of that poor performance. And it gets harder to switch out and get somebody in that'll perform. So I think paying attention to the resident manager doing annual performance reviews, being honest about them, not letting one person do it, making sure that either a committee or the full board is involved because resident managers develop relationships with board members and maybe a president and the president might think he's the best thing on earth and the rest of the board thinks he's terrible. And you get yourself in a bad situation there. So I think being a little more actively involved in reviewing the performance of the resident managers, a safety valve for associations. So that kind of puts me, okay, so I'm a resident manager. And, you know, we've had this conversation. I'm a resident manager. So now they're seeing a board switch, right? Yep. And you're meaning you get this total shift in board. So now he almost like has a totally new board, you know? So I'm like, well, how do I protect myself, you know, because they can come in and just fire me because it's that will, right? So I'm like, man, I would want to make sure that I have my documentation, you know, you have your past reviews, you have the board, the previous board gave me a to-do list. And I think maybe at the first meeting, I'm saying, look, this is the previous list I was given. I want to know if this board has any changes, they want to amend it so that there's no confusion as to what direction he's supposed to go to, because as far as he's concerned, he's probably going to maintain that direction until he's told otherwise, right? Absolutely, absolutely. So, you know, a lot of resident managers will, I'm going to put it this way, I think the on average, the tenure for a resident manager is maybe five to six years at most. There always seems to be a change in the board that has dissatisfaction with the way things are run, and that results in a switch out of the resident manager or the property management company. And resident managers just try to survive from one board to the next. So they try to please the majority of the board and try to predict who's coming on the board and ensure their continued employment. And that's why I'm saying that good documentation helps. The other thing I thought of that gets boards in trouble is ignoring complaints. If a resident manager says, you know, this homeowner is calling me a racist name or a sexist using sexist comments towards me, and they go, well, yeah, yeah, that's Bill. He's crazy. Just do your job. Don't do that. If your resident manager or any of your employees complain about inappropriate conduct of residents or owners or fellow board members, investigate, take appropriate action, censure that board member. If they're acting inappropriately, make sure you document and address those kind of complaints, including complaints that the resident manager or regular employee make about safety or legal actions. You need to use a licensed contractor for that. Oh, you can't repair that electrical thing with our maintenance staff. Oh, yes, we can. We're going to just do it. And then you fire him. He's going to claim that you fired him in retaliation for pointing out something you were doing illegal, and that'll turn into a lawsuit. So address those kind of complaints, document the results of them before you move to terminate or discipline an employee. So our time is up. That went really quick. So we have another segment that we're going to do next Thursday. And I want to go on that one. I want to go a little bit more into detail on a couple other on just maybe two topics, because we have my 14b 125. So we kind of want to talk about how that's going to apply toward resident managers, because that's something that's been coming up a lot lately. The statute's been in existence for a couple of years, but nobody's been complying with it. And now everybody's coming down on it, you know, on making sure everybody's educated. So thank you, John. And I'll see you here next Thursday. Yes. And thank you, everybody. Yeah, so we'll see you guys back here next Thursday for Labor Law Part Two. Thank you. I enjoyed it. Thank you, John. This was really informative. I learned a lot today.