How to Apply Employee's Rent-Free Apartment Value to State Minimum Wage Requirements

As part of a superintendent’s compensation package, an owner may provide a rent-free apartment to live in. According to state law, the owner can apply this apartment allowance toward the superintendent’s minimum wage requirement to an extent.

In New York, the extent to which a rent-free apartment furnished by an employer to an employee in a residential building, and occupied by the employee, is creditable against the minimum wage depends upon the rental rates historically charged by the building for similar apartments, whether the employee’s apartment is above ground or, instead, in the building’s basement, and the number of dwelling units in the building.

Buildings with Nine or More Units

For residential buildings in New York with nine or more dwelling units, the rental value of an apartment furnished, rent free, by an employer to a worker in the building, and occupied by the worker, may be considered part of the minimum wage, but the allowance for that apartment may not exceed:

• With respect to an apartment on the ground or top floors of the building, the lowest rental on June 1, 1975, for apartments having the same number of rooms in the building;
• As to an apartment above the ground and below the top floors of the building, the average rental on June 1, 1975, of apartments with the same number of rooms, in the same line of the building, including the apartments on the ground and top floors;
• With regard to an apartment for permanent occupancy below curb level, 85 percent of the lowest rental on June 1, 1975, for curb-level or above-curb-level apartments having the same number of rooms in the building; and
• As to an apartment for temporary occupancy below curb level, 50 percent of the lowest rental on June 1, 1975, for curb-level or above-curb-level apartments having the same number of rooms in the building [12 N.Y.C.R.R. §141-1.5(a)].

Buildings with Fewer than Nine Units

For buildings with fewer than nine dwelling units, in which the employee’s apartment is at or above curb level, the legal rental in effect on June 1, 1975, as established by the appropriate housing or rent can be applied to minimum wage requirements [12 N.Y.C.R.R. §141-1.5(b)(1)].

For below-curb-level apartments, the amount to be applied to an employee’s wage requirements depends on whether the apartment is for permanent or temporary occupancy. If the apartment is for permanent occupancy, 85 percent of the lowest ceiling rental in effect on June 1, 1975, as established by the appropriate housing or rent commission for a comparable size (number of rooms) curb-level or above-curb-level apartment in the building, whichever is lowest, can be applied to the wage.

In apartments for temporary occupancy, 50 percent of the lowest ceiling rental in effect on June 1, 1975, as established by the appropriate housing or rent commission for a comparable size (number of rooms) curb-level or above-curb-level apartment in the building, whichever is lowest, can be applied [12 N.Y.C.R.R. §141-1.5(b)(2)].

To be able to apply a credit toward the minimum wage requirements, the owner must keep proper records and make them available upon request to the New York State Department of Labor [12 N.Y.C.R.R. § 141-2.1]. Payroll records must be kept for at least six years. And for apartments furnished to employees, the owner is to maintain records showing for each of the apartments in the building, the rent as of June 1, 1975; apartment number; floor on which apartment is located; and the number of rooms in the building [12 N.Y.C.R.R. §141-2.1(d)]. Also, for superintendent apartments that are below curb level, in whole or in part, the owner must have a certificate or permit authorizing occupancy of the apartment. Where no records of apartment rents or occupancy permits are provided, owners can’t apply an apartment allowance toward minimum wage requirements.