Employee housing generally means a dwelling is provided by an employer for employees. Due to the high cost of living and the dearth of available and affordable housing, finding and retaining workers on the East End is an ongoing challenge. Most Hamptons seasonal and/or unskilled workers do not earn enough income to justify living close to their place of employment. Factor in the cost of transportation, time spent in traffic and taxes, and it’s easy to see why it has become difficult in many cases to lure employees to the East End when housing is not offered as a part of their compensation.
In an area that regularly has a low home inventory, it’s simply too expensive for most unskilled workers to live here.
“It’s tough to hire and keep good people if they have to sit in traffic for hours to get to work,” said Dawn Watson, a Southampton-based real estate salesperson for Serhant. “We’ve been talking about brain drain here for decades, but this staff housing challenge could have even more crippling effects on our local economy.”
Staff or employee housing traces its roots to the 19th century Industrial Revolution when factory owners, largely in England, provided housing — sometimes filling entire towns — to attract workers to run their enterprises. It hasn’t changed much. In an effort to attract and retain employees, today business owners and managers have built houses, rented apartments and in some cases, provided accommodations in their own homes, significantly expanding a longtime tradition in the area of workforce housing, which on Long Island has agricultural roots. For some employees, it’s the only way they can keep their current jobs and they are relieved of having to find their own area housing.
Today housing has become a “perk” in areas where it has gotten very expensive, such as Silicon Valley. In a case like this, however, housing is typically offered for a skilled worker who may need to relocate. When it is used to accommodate highly trained and educated employees, such as a hospital renting apartments for doctors or nurses, there are generally little to no complaints from neighbors.
There are staff-housing limitations, especially in agriculture. Laborers, caretakers, supervisory staff and forepersons have historically been provided housing. This is generally permissible providing the accommodations are located on the same land where the employment activity occurs. Such residents must be actively employed in verifiable agricultural, farm-related or conservation work for the property in question.
“Affordable housing is desperately needed here on the East End,” Watson added. “The number of available and affordable year-round rentals is at an all-time low, and market prices of for-sale properties are still very near the highest benchmarks we saw during the beginning of the pandemic.”
Staff housing can serve employer and employee well by providing a safe and affordable place to live, especially for service workers and those in lower-paying jobs who wouldn’t be able to afford market-value housing while ensuring that employers can fill vital positions.
Sounds like a so-called win-win, right? Not everyone in the community agrees.
While there are no statistics on this, most are not opposed to staff housing in theory. The problems tend to begin when it involves unskilled workers housed in private residences and overcrowding becomes apparent.
“This is when the complaints typically start,” said someone at the Southampton Town Justice Court, who asked not to be identified when asked about the state of staff housing in the town. “Staff housing is not illegal, but there are laws regarding overcrowding. When there’s overcrowding and noise, trucks coming and going, the local residents tend to complain.”
Town codes typically allow for up to two persons per bedroom. As part of its zoning code, East Hampton prohibits residents of a single-family home from having separate written or oral leases or rental arrangements. Similarly, single-family homes in East Hampton are restricted to one kitchen. These limitations are designed to control occupancy. Codes also try to maintain that residents are of a “permanent nature” i.e., a family, and the environment is neither a framework for “transient or seasonal” living nor an association or relationship that is transient or seasonal.
Federally speaking, staff housing can be provided free, discounted, in addition to or in place of wages. However, jobs with room and board provided cannot pay employees only in free housing.
Employer-provided housing is a taxable fringe benefit, though there are exceptions to housing as a benefit under federal law. The specific circumstances of jobs that pay for housing determine if the benefit is taxable and if so, how much is subject to taxes. According to Internal Revenue Code Section 61, employer-provided housing is a taxable benefit to employees, though Section 119(a) of the Internal Revenue Code specifically excludes from gross income the value of the housing if the following three requirements are satisfied:
The employee is required to accept such housing as a term and condition of employment.
The housing is on the business premises of the employer.
The housing is furnished for the convenience of the employer.
If a campus provides housing to an employee who does not meet the above criteria and there is no charge to the employee for the housing, the value of the housing is viewed as income that is subject to all federal tax withholdings and is reportable on the employee Form W-2. New York State does not impose taxes on employer-provided housing.
