Karen J. Bannan in Legal/Financial on November 8, 2018
A Queens co-op board recently terminated a staff member. After his firing, the former staffer continued to hang around the building, doing freelance home-improvement work for shareholders.
“The board president thought there was a policy in place that would prevent that, but if there was, it wasn’t being enforced,” says Theresa Racht, an attorney for the building. “Now they have a terminated staff member who has been banned from the building doing work for a shareholder and still maintaining access.”
Traditionally, residents of New York co-ops and condos have called on their supers and other staffers to perform minor jobs that fall outside the auspices of his or her official duties. Many co-ops and condos even encourage the practice, as a low-cost service to residents and a way to nurture loyalty in the staff. It’s only recently, however, that boards are recognizing the myriad problems associated with this type of arrangement. From lack of licensing to worker’s-compensation conflicts to potential insurance claims, attorneys and board members have a lot to think about – and legislate.
The biggest issue is liability, says attorney David Berkey, a partner at Gallet Dreyer & Berkey. A board could face claims if work done after hours by an employee causes damage to the building or a third party, or injury to the employee. For instance, if the super is putting in a new sink and there is flooding that damages a unit below, it’s not always clear whose insurance company – the building’s or the homeowner’s – is responsible.
“There are several liability concerns,” adds Berkey. “Sometimes the co-op or condo board is viewed as a joint employer, especially if that employee gets hurt working in the tenant shareholder’s or unit-owner’s apartment.” The board can also face liability if someone is injured onsite or if the superintendent’s work is sub-par.
There are several ways a board can protect itself and its unit-owners or shareholders. Berkey advises his clients to be “ultraconservative” and prohibit the staff from doing any work outside of their official duties in a building. If the board or residents absolutely insist on allowing it, he suggests restricting the types of activities that can be performed.
“You’re looking for acceptable-risk items – changing washers on a sink or a speedy connector on a toilet,” he says. In such cases, adds Racht, it is also important for boards to require both the employee and the shareholder or unit-owner to sign an indemnification contract and for the employee to hold his or her own insurance. “If you’ve got a super who is also a general contractor who is licensed and insured, it could be okay,” she says.
Iwona Bardecka, a senior account executive at Century Management, says the board of a building she manages is currently grappling with this issue. “Right now they are working with insurance brokers and an attorney trying to figure out the best way to protect everyone involved,” Bardecka says. “They’re looking to create new rules, add them to the house rules, and issue memos to inform shareholders. Right now, shareholders don’t realize that they’re playing Russian roulette by hiring a building employee. They don’t realize their homeowner’s policy is not going to cover them if there’s a problem.”
Bardecka says her board is also looking into indemnification agreements as well as educating the staff as to the personal risks they may face by working as an independent contractor.
Once a board acts to forbid or restrict moonlighting by staffers, the next step is enforcement of the rule. “If someone is violating house rules,” says Racht, “you may need to charge [the shareholder] a fine and hold your employee in violation of [his or her] employment contract.”
Engage, enrage, ask questions and give answers with your community of board members. Submit your questions and comments here!
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.