California court clarifies when fired workers lose rights to employer housing
Employee housing isn't a tenancy, California court rules, stripping fired workers of tenant protections in a binding December decision.
The December 22 decision from the Appellate Division of the Superior Court in Los Angeles County offers clarity for employers navigating the tricky intersection of employment agreements and tenant rights laws.
The case started when John De Paolo, who manages a Sherman Oaks apartment building through his family trust, hired Jenny Rosales as his on-site property manager in late 2020. The deal seemed straightforward: Rosales would handle day-to-day operations and live in Unit 106 as part of her compensation package.
Their written agreement spelled out the arrangement clearly. Rosales would pay 710 dollars monthly for an apartment typically worth 780 dollars, but that same 710 dollars also represented her entire paycheck as manager. In other words, the housing was her salary, not a separate rental transaction.
The contract included language HR professionals should note. It stated the job was at-will, meaning De Paolo could end it anytime without cause or advance warning. More importantly, it required Rosales and anyone living with her to move out within 30 days after her employment ended.
About six weeks after moving in, Rosales reconciled with Richard Charlemagne, the father of her children, and he joined her in the unit. Both later testified they listed each other as spouses on rental applications, though they were not married.
Things went south in August 2023 when De Paolo fired Rosales. She responded immediately, claiming the termination was retaliation for complaints she had made about his business practices. She and Charlemagne refused to leave.
For nearly a year, Rosales tried to keep paying the monthly 710 dollars. De Paolo rejected every payment. She even deposited money directly into his account without permission. He sent it all back.
By July 2024, De Paolo had enough. He served a 30-day notice to quit and filed an eviction lawsuit in August.
At trial, Rosales and Charlemagne argued they were tenants protected by California's Tenant Protection Act, not just employees getting housing as a job perk. They claimed the signatures on their employment agreement were forged. They insisted the eviction was illegal retaliation. They said they deserved 60 days notice, not 30.
Rosales testified she had a verbal deal for free rent and that Charlemagne had separately applied to rent the unit, paying his own security deposit. The trial judge examined the original agreement and found physical indentations on the back from signatures, suggesting someone actually signed it.
The court sided with De Paolo completely. It found Rosales had no right to stay in the apartment separate from her job. When her employment ended, so did her housing. Charlemagne fared no better. The judge determined he never had his own lease but simply lived there as Rosales's additional occupant.
On the retaliation claim, the court said Rosales failed to prove De Paolo fired her for illegal reasons. Beyond her accusation in an email, she offered no real evidence of a retaliatory motive.
Rosales and Charlemagne appealed, and that is where the December ruling comes in.
The appellate court affirmed everything. In the decision, the panel tackled the central question: Does a fired employee living in employer-provided housing count as a tenant under state law?
The answer was a clear no.
The court explained that California law has long held that workers occupying company property as part of their pay have no right to stay after getting fired. Once employment ends, they become either tenants at sufferance or licensees. Neither category gets tenant protections.
The Tenant Protection Act requires that occupancy be lawful to qualify as a tenancy. After Rosales was fired and the 30-day period passed, her continued presence became unlawful. An unlawful occupancy cannot be a protected tenancy.
The judges rejected the argument that refusing to leave and trying to pay rent somehow transformed Rosales into a tenant. Without both parties agreeing to change their relationship, no new tenancy existed. De Paolo's consistent rejection of payments proved he never agreed.
Importantly, the court noted that even the 30-day notice De Paolo provided was more than legally required. Under California law, he could have filed eviction papers immediately after firing Rosales without giving any notice at all.
For HR professionals, the takeaway is significant. Carefully written employment agreements that explicitly tie housing to continued employment can shield companies from tenant protection laws, even California's famously strict ones.
The ruling matters most for industries where employee housing is common: property management, hospitality, schools and universities, farms, and healthcare facilities with residential staff. But any HR department dealing with company-provided housing should pay attention.
The decision reinforces that how you structure and document these arrangements matters enormously. Calling someone an employee in the contract, making clear the housing serves the company's needs, and requiring move-out after termination all helped De Paolo prevail.
