McAfee & Taft AgLINC Agriculture & Equine Industry Newsletter - July 2012: Avoiding hidden liabilities with employee housing agreements by Nathan Whatley

by McAfee & Taft
Contact

[author: Nathan Whatley]

Farms and ranches of various sizes often provide their employees with some form of housing in addition to the wages they are paid. Little thought typically goes into the legal status of the housing arrangement. This is unfortunate because if employee housing is not handled properly, it can create real liability for agricultural and equine operators. A good way to protect your operation from liability is to have a written housing agreement. Some key considerations for employee housing agreements are addressed here.

Is your employee a tenant?

An initial decision to be made when it comes to employee housing is whether you want your employees to occupy your housing as a tenant, or under a license. A license means that the employee is there under the owner’s permission, and housing is connected directly to his or her employment. It is easier to evict an employee if the employee occupies the housing under a license. However, there is a much greater risk for the housing to be treated as part of an employee’s wages, which could drive up overtime pay. If the employee is treated as a tenant, it is easier to separate housing from an employee’s wages. The downside to tenancy is that it is not as easy to evict the occupant after employment has been terminated. State law sets the legal minimum amount of notice that must be given prior to eviction of a residential tenant. The minimum is usually 30 or 60 days, depending upon the type of lease.

Whether the housing arrangement will be through a license or tenancy is your choice, but it needs to be established through a written agreement.

Who will be allowed to occupy the property?

An employee housing agreement should state who can and cannot live in the house. It is recommended that only the employee, spouse and minor children be allowed to live in the property. Any additional person or persons who wish to occupy the house must be approved by the owner in writing. Having a written housing agreement helps owners clearly communicate their expectations related to occupancy of the housing and maintain control of the housing property.

What are the rules for those occupying the property?

An employee housing agreement should include clear written rules. One issue that commonly arises is whether the employee may bring animals onto the property. Any kind of animal is a potential for liability so the agreement should require health records for pets, as well as require that an employee obtain written permission from the property owner before an animal is brought into the housing. The agreement should also prohibit employees from having animals that are banned by law.

Rules that prohibit children from playing in non-safe areas, such as traffic thoroughfares and animal pens, can also be written into a housing agreement. It should also be stated that employees cannot bring children to work with them. A written housing agreement can also prevent derelict cars on property, establish quiet hours, limit alcohol use, and make employees responsible for visitors.

Who will pay for utilities?

State in the written agreement who is responsible to pay for utilities. In many instances you may wish to establish utility services in the employee’s name. Alternatively, the amount the property owner will pay for utilities can be capped in the agreement.

Should you charge the employee rent?

Some owners may choose to charge their employees rent. One benefit to charging rent is that if an employee goes out on workers’ compensation leave, it simplifies the employee staying in the house. If the employee stops paying rent, he or she can be evicted. On the other hand, if rent is not charged, an employee who is evicted might claim that he or she was retaliated against for filing a workers’ compensation claim.

Another issue to be wary of is paying rent on behalf of an employee. Such a cash payment will likely be construed as a wage, which can increase payroll taxes and overtime wages.

What rights do you have to inspect employee housing?

Your employee housing agreement should establish the right to conduct periodic inspections. Inspections should be performed at least once per year. After inspecting the property, perform any necessary repairs.

Additional issues to consider in your employee housing agreements include whether to require renter’s insurance and whether the farm or ranch’s liability insurance will cover losses associated with a leased or licensed property.

Employee housing is an issue that too many farmers and ranchers are not giving enough attention. There are many options for managing employee housing, but an owner can quickly lose control and open the door to significant liability if an appropriate agreement is not put in place.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McAfee & Taft | Attorney Advertising

Written by:

McAfee & Taft
Contact
more
less

McAfee & Taft on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.