Initially, we note there are tax and payroll reporting implications arising from an association’s decision to hire employees as opposed to independent contractors. These are issues that are best addressed by association’s CPA. Additionally, there are insurance and liability implications. If any persons are allegedly injured or property damaged by an employee of the association, there is a greater likelihood the association will be held liable for that injury or damage than if the damage or injury was caused by an independent contractor. Merely having an agreement entitled “Independent Contractor Agreement” is not sufficient to establish ones status as an independent contractor; the authorities will look to several factors in making this determination.
Employment Laws
The federal and state statutes and cases that define the rights, duties and obligations of employers and employees to each other. See also Employees. Associations with employees should always have an Employer’s Liability Insurance policy to protect against possible liability arising from the employment relationship.
Enforcement
Association boards have the duty to enforce governing documents. To be enforceable, enforcement must comply with the due process procedures in the governing documents (Civ. Code §5855 and Corp. Code §7341). This includes, minimally, providing at least 10 days’ advance notice to an owner of a hearing to consider whether to impose discipline (governing documents may require a longer notice period). Associations can be held liable for failure to enforce the governing documents.
Equitable Servitudes
When obligations and restrictions imposed in deeds and certain other written agreements meet strict statutory requirements, they are said to “run with the land” and bind successors to the original parties. Other deeds and written agreements that do not meet those statutory requirements are nevertheless enforced as “equitable servitudes” under certain circumstances. The CC&Rs of common interest developments are routinely enforced as equitable servitudes, because the Davis-Stirling Common Interest Act provides that the covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable.