How to Get 1/60th Rent Hike for Extra Work Done by Employee
If you own a building with more than 35 apartments, you pay a building employee extra to make improvements to an apartment, and the employee does the work outside normal working hours, you can collect a monthly rent increase amounting to 1/60th of what you pay the employee. The increase bumps up to 1/40th of the cost of improvements for buildings containing 35 or fewer apartments.
When Can You Get Rent Hike?
You can get a rent hike for the employee’s labor if:
1. The work is a type that qualifies for a 1/60th rent increase;
2. The work isn’t part of the employee’s regular duties;
3. You paid the employee extra for the work, on top of his regular salary; and
4. You have proof of the cost of the work.
In a recent DHCR case, a management company served as the contractor. The DHCR stated that the fact that it served as contractor didn’t necessarily require exclusion of the labor costs. There was no proof that the improvement was performed by the landlord’s employees as part of their regular duties [514 48th Street: DHCR Adm. Rev. Docket No. WH210013RO, June 2013].
In another case, the DHCR disallowed labor costs. The owner acted as his own general contractor and his employees performed the work as part of their regular compensation. Although requested, the owner failed to submit documentation related to the claimed labor costs. So the DHCR couldn’t determine whether the owner's employees were working as part of their regular compensation, because there was no proof of the number of hours, wages, and times that work was performed. The DHCR stated that the owner’s estimates can’t substitute for proved labor costs. [314 E. 82nd Street: DHCR Adm. Rev. Docket No. SK430062RO, June 2008].
How to Show Work Not Part of Employee’s Duties
Here are some additional facts that could help you show that the work isn’t part of the employee’s regular duties. If your tenant challenges your right to a rent hike, point these facts out in your answer to the tenant’s complaint:
Work not done during employee’s work hours. You have a better chance of getting a rent hike if you can show the DHCR that the work was done before or after the employee’s normal working hours. For example, if your porter works from 9 a.m. to 5 p.m. and did the work between 7 p.m. and 9 p.m., this should help you show that the work wasn’t part of his normal duties.
Work requires added level of expertise. If the work requires a level of expertise not normally possessed by that type of employee, it could help your case. For example, in one case, the building superintendent had performed tile work as part of a renovation. The owner had submitted an affidavit from the super, which stated that he was an expert in tile-setting and that he was paid separately for the work, over and above his salary. The owner submitted copies of a bill and cancelled check for the total cost of the work. The owner claimed that these documents proved that the tiling was billed and paid for separately from the super’s customary work and wasn’t done as part of his regular duties. The DHCR agreed, and allowed the owner to collect a rent hike for the work [235 W. 76th Street: DHCR Adm. Rev. Docket Nos. EK 410099-RO, EJ 410498-RT, March 1994].
Don’t pay cash. If you pay for the employee’s extra work in cash, you’ll have a harder time convincing the DHCR that this was a legitimate expense. That’s true even if your employee gives you a receipt for the payment. You should get a bill from the employee and pay it by check. The bill and cancelled check will give you proof that you paid for the work. The cancelled check will show that the payment to the employee was separate from his or her regular paycheck.
If Tenant Challenges Rent Hike
Let’s say you pay your super an extra $1,200 to install a new tile floor in the bathroom of an apartment. If a tenant challenges your right to collect a rent increase for the work, your answer to the DHCR might say something like this:
I should be allowed to collect a 1/60th rent hike of $20 per month for the new tile floor installed in the bathroom. I paid my superintendent, John Doe, $1,200 to perform the installation. This payment was in addition to Mr. Doe’s regular salary. Also, installing tile floors is not part of Mr. Doe’s regular duties as the building’s superintendent and requires a high degree of expertise. Mr. Doe did the work in the evening, after his normal working hours ended at 5 p.m. Enclosed please find a copy of Mr. Doe’s bill for the work, and a cancelled check payable to Mr. Doe for $1,200. Also, I am attaching an affidavit from Mr. Doe.
To support your case, submit an affidavit from your employee describing the work he did and the level of expertise required for it. The employee should also state that he was paid extra for the work. Have your employee sign the affidavit and get his signature notarized.