Sticky Details of Sensitive Employee Terminations Require Boards to be Diligent

As all cooperative boards are challenged with the potential of having a contested termination of a member’s membership and occupancy, there is nothing more challenging than a cooperative having to litigate a contested termination action against one of its employees who is also a member of record. It can be quite common in a cooperative to have a maintenance employee reside in the cooperative. In many cooperatives, the cooperative may have had a janitorial unit built into the original dwelling unit arrangements, or the cooperative may have repurchased a unit to retire it as an apartment unit; and then rent it to the maintenance employee to be on premises. In some instances, the cooperative hires a member to be a maintenance employee, or the employee wants to become a member or is required to do so. It is possible the employee might be a resident site manager. It is also possible that the maintenance or manager person may not be a cooperative employee, but an employee of the management company. Also, in this article, the use of membership also means “share ownership,” and “cooperative interest” is the joint interest of the membership and the right of occupancy. Occupancy agreement also includes “proprietary leases.” The problems discussed herein are the same.

One may think that it is hard to fathom that the beloved maintenance employee, whom you wave and say hello to on a daily basis and willingly let into your home for maintenance purposes, would do anything to jeopardize his or her employment with the cooperative and/or his or her membership and occupancy within the cooperative. However, this dismal situation has been happening all too often at many cooperatives and unfortunately at the expense of the cooperative. In recent years, various cooperatives have had to terminate their maintenance employee’s employment as well as his or her membership and occupancy as a result of embezzlement, fraud, immoral, illegal and criminal activities, self-dealing activities, forgery, timesheet and overtime fraud, material noncompliance with employment duties, drug and alcohol abuse, violations of the rules and regulations of the cooperative’s governing documents as well as other atrocious actions committed against the cooperative at the hands of the maintenance employee. Said cooperatives were successful in terminating the employment as well as the membership and occupancy of the maintenance employee where full termination was warranted. The cooperatives have also been successful in instituting membership probationary measures against maintenance employees whose employment was terminated but was permitted to continue their member- ship and occupancy at the cooperative. The remedy to the complex, sensitive termination of a maintenance employee who is also a member of record is not only for the cooperative to have zealous and tenacious legal representation but to also have a board of directors that will not stand for such immoral and illegal behavior from its employees.

While it may seem beneficial to have a maintenance employee on the premises 24/7, it does not come without difficulties. There are many downsides to having a maintenance employee reside on the complex. There are far fewer downsides to have a non-member employee on the premises than an employee who is also a member. The board has a lot of sensitive details that it must consider if it so chooses to offer a unit to a maintenance employee. Because of the multiple legal and employment complexities involved, it is vital that the Board consult with its attorney during this process.

The first complexity that the cooperative will be faced with is the drafting of the employment and the needed rider to the occupancy agreement, if the employee is a or to become a member. If the employee is a union member and the cooperative is subject to a union agreement or master union agreement, the cooperative has to negotiate the employment contract and/or the terms of occupancy with the union. The cooperative must have an “air tight” employment and, if applicable, occupancy agreement. The employment and occupancy agreement, in the appropriate document, must include, but are not limited to provisions such as job description; hours to be worked per day/week; on call or emergency maintenance protocols; overtime; labor union requirements, if applicable; rules and regulations; insurance; indemnification; alterations/modifications; termination; etc. The attorney can assist the cooperative in drafting these agreements so that the cooperative would not only be fully protected, but to also make sure that the agreement does not violate any employment laws.

The second complexity that the cooperative will without a doubt encounter is how to be sure that a maintenance employee who resides in his/her unit does not abuse the convenience of living on the complex. Trust plays a huge role in this situation. The cooperative does not want a maintenance employee who takes advantage of the convenience by constantly going back and forth to his/her unit during working hours for breaks, lunch, attending to personal/family matters, inviting of guests, working on his or her own personal dwelling unit or violating the rules and regulations of the cooperative. Most importantly, the employee is privy to a lot of sensitive information other members are not and can be prone to engage in politicking with the other members on or off cooperative time in cooperative elections, policy matters or in his own personal interest, like the employee’s differences with management, pay, treatment, etc. The more air tight the employment and occupancy agreement is; the more protection the cooperative has with respect to having a remedy mechanism available to it when the maintenance employee abuses the convenience of living on the complex.

So what happens when the board has determined that the member of record maintenance employee has violated a term of his/ her employment agreement and/or a provision of the cooperative’s governing documents? In this case, the cooperative must not only abide by its respective state’s employment laws and union requirements, if applicable, but it also must abide by its respective state’s laws, statutes and ordinance in recovering possession of the dwelling unit. The cooperative must also abide by the governing documents in terminating the member of record maintenance employee’s membership and occupancy. As the maintenance employee is a member of record who executed an occupancy agreement and has a membership interest in the cooperative, the termination of the membership and the determination of the equity or interest due back to the individual upon move out will be determined by the governing documents.

If a union member, these situations will usually involve grievance procedures with the union where just cause for employment termination needs to be shown. Many attorneys advise clients to always have a due process hearing with respect to the membership termination.

In the event that the cooperative decides to terminate the employment of a member of record maintenance employee but permits the individual to remain as a member, the cooperative must be mindful of potential negative attitudes or treatment that may come its way from the terminated employee. It is vital for the benefit of not only the cooperative and the terminated employee, but also for the membership, that both parties remain cordial. The parties must remember that while the employer/employee relationship has been terminated, there is still a cooperative/ member relationship that must continue on a respectful level.

In conclusion, there are multiple legal and employment related complexities that are involved when a cooperative permits a maintenance employee to reside in the complex. As demonstrated, it is vital that the board consults with its attorney with respect to this arrangement. Moreover, the cooperative must be mindful that it is vital that it comply with all state laws and statutes as well as its own governing documents when the cooperative determines that the maintenance employee’s action rises to the level where a termination of his/her employment and/or membership is warranted.

The author acknowledges contributions made by Herbert H. Fisher to this article.

Randall Pentiuk, Esq., is the founding member, attorney and managing shareholder at Pentiuk, Couvreur and Kobilijak, PC. in Wyandotte, Mich.

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Sticky Details of Sensitive Employee Terminations Require Boards to be Diligent

As all cooperative boards are challenged with the potential of having a contested termination of a member’s membership and occupancy, there is nothing more challenging than a cooperative having to litigate a contested termination action against one of its employees who is also a member of record. It can be quite common in a cooperative to have a maintenance employee reside in the cooperative. In many cooperatives, the cooperative may have had a janitorial unit built into the original dwelling unit arrangements, or the cooperative may have repurchased a unit to retire it as an apartment unit; and then rent it to the maintenance employee to be on premises. In some instances, the cooperative hires a member to be a maintenance employee, or the employee wants to become a member or is required to do so. It is possible the employee might be a resident site manager. It is also possible that the maintenance or manager person may not be a cooperative employee, but an employee of the management company. Also, in this article, the use of membership also means “share ownership,” and “cooperative interest” is the joint interest of the membership and the right of occupancy. Occupancy agreement also includes “proprietary leases.” The problems discussed herein are the same.

One may think that it is hard to fathom that the beloved maintenance employee, whom you wave and say hello to on a daily basis and willingly let into your home for maintenance purposes, would do anything to jeopardize his or her employment with the cooperative and/or his or her membership and occupancy within the cooperative. However, this dismal situation has been happening all too often at many cooperatives and unfortunately at the expense of the cooperative. In recent years, various cooperatives have had to terminate their maintenance employee’s employment as well as his or her membership and occupancy as a result of embezzlement, fraud, immoral, illegal and criminal activities, self-dealing activities, forgery, timesheet and overtime fraud, material noncompliance with employment duties, drug and alcohol abuse, violations of the rules and regulations of the cooperative’s governing documents as well as other atrocious actions committed against the cooperative at the hands of the maintenance employee. Said cooperatives were successful in terminating the employment as well as the membership and occupancy of the maintenance employee where full termination was warranted. The cooperatives have also been successful in instituting membership probationary measures against maintenance employees whose employment was terminated but was permitted to continue their member- ship and occupancy at the cooperative. The remedy to the complex, sensitive termination of a maintenance employee who is also a member of record is not only for the cooperative to have zealous and tenacious legal representation but to also have a board of directors that will not stand for such immoral and illegal behavior from its employees.

While it may seem beneficial to have a maintenance employee on the premises 24/7, it does not come without difficulties. There are many downsides to having a maintenance employee reside on the complex. There are far fewer downsides to have a non-member employee on the premises than an employee who is also a member. The board has a lot of sensitive details that it must consider if it so chooses to offer a unit to a maintenance employee. Because of the multiple legal and employment complexities involved, it is vital that the Board consult with its attorney during this process.

The first complexity that the cooperative will be faced with is the drafting of the employment and the needed rider to the occupancy agreement, if the employee is a or to become a member. If the employee is a union member and the cooperative is subject to a union agreement or master union agreement, the cooperative has to negotiate the employment contract and/or the terms of occupancy with the union. The cooperative must have an “air tight” employment and, if applicable, occupancy agreement. The employment and occupancy agreement, in the appropriate document, must include, but are not limited to provisions such as job description; hours to be worked per day/week; on call or emergency maintenance protocols; overtime; labor union requirements, if applicable; rules and regulations; insurance; indemnification; alterations/modifications; termination; etc. The attorney can assist the cooperative in drafting these agreements so that the cooperative would not only be fully protected, but to also make sure that the agreement does not violate any employment laws.

The second complexity that the cooperative will without a doubt encounter is how to be sure that a maintenance employee who resides in his/her unit does not abuse the convenience of living on the complex. Trust plays a huge role in this situation. The cooperative does not want a maintenance employee who takes advantage of the convenience by constantly going back and forth to his/her unit during working hours for breaks, lunch, attending to personal/family matters, inviting of guests, working on his or her own personal dwelling unit or violating the rules and regulations of the cooperative. Most importantly, the employee is privy to a lot of sensitive information other members are not and can be prone to engage in politicking with the other members on or off cooperative time in cooperative elections, policy matters or in his own personal interest, like the employee’s differences with management, pay, treatment, etc. The more air tight the employment and occupancy agreement is; the more protection the cooperative has with respect to having a remedy mechanism available to it when the maintenance employee abuses the convenience of living on the complex.

So what happens when the board has determined that the member of record maintenance employee has violated a term of his/ her employment agreement and/or a provision of the cooperative’s governing documents? In this case, the cooperative must not only abide by its respective state’s employment laws and union requirements, if applicable, but it also must abide by its respective state’s laws, statutes and ordinance in recovering possession of the dwelling unit. The cooperative must also abide by the governing documents in terminating the member of record maintenance employee’s membership and occupancy. As the maintenance employee is a member of record who executed an occupancy agreement and has a membership interest in the cooperative, the termination of the membership and the determination of the equity or interest due back to the individual upon move out will be determined by the governing documents.

If a union member, these situations will usually involve grievance procedures with the union where just cause for employment termination needs to be shown. Many attorneys advise clients to always have a due process hearing with respect to the membership termination.

In the event that the cooperative decides to terminate the employment of a member of record maintenance employee but permits the individual to remain as a member, the cooperative must be mindful of potential negative attitudes or treatment that may come its way from the terminated employee. It is vital for the benefit of not only the cooperative and the terminated employee, but also for the membership, that both parties remain cordial. The parties must remember that while the employer/employee relationship has been terminated, there is still a cooperative/ member relationship that must continue on a respectful level.

In conclusion, there are multiple legal and employment related complexities that are involved when a cooperative permits a maintenance employee to reside in the complex. As demonstrated, it is vital that the board consults with its attorney with respect to this arrangement. Moreover, the cooperative must be mindful that it is vital that it comply with all state laws and statutes as well as its own governing documents when the cooperative determines that the maintenance employee’s action rises to the level where a termination of his/her employment and/or membership is warranted.

The author acknowledges contributions made by Herbert H. Fisher to this article.

Randall Pentiuk, Esq., is the founding member, attorney and managing shareholder at Pentiuk, Couvreur and Kobilijak, PC. in Wyandotte, Mich.

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