In the context of community association document inspections by members, the Davis-Stirling Act defines "association records" to include "executed contracts not otherwise privileged under law." (Civ. Code §5200(a)(4).) The Act further provides that for the purpose of member inspections, "contracts for management" are not "privileged contracts." (Civ. Code §5215(a)(5)(D).)
Independent Contractors. It is clear that management contracts with independent contractors including portfolio management companies are not "privileged contracts" and therefore are subject to inspection by association members. There is a split of opinion as to whether members are entitled to review a general manager's employment agreement.
Employment Agreements. Some associations employ a general manager (sometimes called an "executive director") as an employee of the association whose job is to oversee other employees of the association and be responsible for the general administration of the association's business affairs. It is common for the general manager to have an employment agreement with the association, and occasionally members will ask to review that employment agreement.
OPINION #1: NO RIGHT TO INSPECT. California's Constitution specifically recognizes the inalienable right of privacy–a right the courts have applied to employment information. In recognition of this constitutional right of privacy, the Davis-Stirling Act expressly excludes from the broad scope of community association member inspection rights "personnel records" and information regarding compensation paid to individual employees. (Civ. Code §5215(a)(5)(E) & (b).)
The Davis-Stirling Act also recognizes a distinction between employees and vendors when it comes to disclosures (Civ. Code §5375) as well as rules that managing agents must follow in the handling of association funds (Civ. Code §5380). In both statutes, the term "managing agent" expressly excludes full-time employees of the association. (Civ. Code §5375; §5385.)
Finally, advocates of employee privacy believe that the protections found in Labor Code §1197.5(d) include employment agreements when it states that "Every employer shall maintain records of the wages and wage rates, job classifications, and other terms and conditions of employment of the persons employed by the employer."
OPINION #2: RIGHT TO INSPECT. Attorneys who believe a manager's contract is subject to inspection argue that Civil Code §5215(b) begins with the opening statement that the items listed in that subparagraph may be withheld or redacted from what is otherwise an "association record" under (a)(1). The implication is that the subparagraph is talking about permissible exclusions from a larger document that is an association record and one of the listed exclusions is for "personnel records, other than payroll records, required to be provided under paragraph (2)." Subparagraph (d)(2) does not use the term "personnel records." Instead it states:
Except as provided by the attorney-client privilege, the association may not withhold or redact information concerning the compensation paid to employees, vendors, or contractors. Compensation information for individual employees shall be set forth by job classification or title, not by the employee's name, social security number, or other personal information.
In most employment agreements, compensation includes not only salary but additional benefits such as car allowance, severance payments, health insurance, a 401(k) retirement fund, perhaps a residence and so forth. Those compensation items are not included in the association's "payroll records" so it can be argued that the association must produce the contract so as to reveal all compensation items.
Recommendation: Until this issue has been clarified by the courts or the legislature, boards should rely on the advice of counsel as to whether an onsite manager's contract should be made available for inspection and copying.
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