By Nathan Whatley
Farms and ranches of various sizes often
provide their employees with some form
of housing in addition to the wages they
are paid. Little thought typically goes into
the legal status of the housing arrangement. This is unfortunate
because if employee housing is not handled properly, it can create
real liability for agricultural and equine operators. A good way to
protect your operation from liability is to have a written housing
agreement. Some key considerations for employee housing
agreements are addressed here.
Is your employee a tenant?
An initial decision to be made when it comes to employee housing
is whether you want your employees to occupy your housing as
a tenant, or under a license. A license means that the employee
is there under the owner’s permission, and housing is connected
directly to his or her employment. It is easier to evict an employee
if the employee occupies the housing under a license. However,
there is a much greater risk for the housing to be treated as part
of an employee’s wages, which could drive up overtime pay. If the
employee is treated as a tenant, it is easier to separate housing from
an employee’s wages. The downside to tenancy is that it is not as
easy to evict the occupant after employment has been terminated.
State law sets the legal minimum amount of notice that must be
given prior to eviction of a residential tenant. The minimum is
usually 30 or 60 days, depending upon the type of lease.
Whether the housing arrangement will be through a license or
tenancy is your choice, but it needs to be established through a
Who will be allowed to occupy the property?
An employee housing agreement should state who can and cannot
live in the house. It is recommended that only the employee,
spouse and minor children be allowed to live in the property. Any
additional person or persons who wish to occupy the house must
be approved by the owner in writing. Having a written housing
agreement helps owners clearly communicate their expectations
related to occupancy of the housing and maintain control of the
What are the rules for those occupying the property?
An employee housing agreement should include clear written
rules. One issue that commonly arises is whether the employee
may bring animals onto the property. Any kind of animal is a
potential for liability so the agreement should require health
records for pets, as well as require that an employee obtain written
permission from the property owner before an animal is brought
into the housing. The agreement should also prohibit employees
from having animals that are banned by law.
Rules that prohibit children from playing in non-safe areas, such
as traffic thoroughfares and animal pens, can also be written into a
housing agreement. It should also be stated that employees cannot
bring children to work with them. A written housing agreement
can also prevent derelict cars on property, establish quiet hours,
limit alcohol use, and make employees responsible for visitors.
Who will pay for utilities?
State in the written agreement who is responsible to pay for
utilities. In many instances you may wish to establish utility
services in the employee’s name. Alternatively, the amount the
property owner will pay for utilities can be capped in the
Should you charge the employee rent?
Some owners may choose to charge their employees rent. One
benefit to charging rent is that if an employee goes out on workers’
compensation leave, it simplifies the employee staying in the
house. If the employee stops paying rent, he or she can be evicted.
On the other hand, if rent is not charged, an employee who is
evicted might claim that he or she was retaliated against for filing
a workers’ compensation claim.
Another issue to be wary of is paying rent on behalf of an
employee. Such a cash payment will likely be construed as a wage,
which can increase payroll taxes and overtime wages.
What rights do you have to inspect employee housing?
Your employee housing agreement should establish the right to
conduct periodic inspections. Inspections should be performed
at least once per year. After inspecting the property, perform any
Additional issues to consider in your employee housing agreements
include whether to require renter’s insurance and whether the
farm or ranch’s liability insurance will cover losses associated with
a leased or licensed property.
Employee housing is an issue that too many farmers and ranchers
are not giving enough attention. There are many options for
managing employee housing, but an owner can quickly lose
control and open the door to significant liability if an appropriate
agreement is not put in place.