New Court Ruling Allows California Employers to Evict Former Resident Managers When Employment Ends
The California Court of Appeals’ recent decision in De Paolo v. Rosales clarifies the rights of an employer to evict an on-site resident manager following termination of employment. Employers who provide housing as part of employment may evict former employees after lawfully terminating that employment.
Case Details
John De Paolo managed a Los Angeles apartment building through his family trust. De Paolo hired Jenny Rosales as his on-site resident manager in late 2020. Rosales, an at-will employee, received housing on the property as part of her compensation.
The resident manager’s agreement explicitly tied Rosales’s housing to employment and required her to vacate the premises within 30 days after De Paolo ended her employment.
Six months after signing the agreement, Rosales’s partner Richard Charlemagne moved into the unit. Neither Charlemagne nor Rosales had a lease separate from the employment agreement.
Although De Paolo terminated Rosales’s employment in August 2023, she did not vacate the on-site unit. The occupants continuously refused to leave, even offering to pay rent. Nearly a year later, on July 10, 2024, De Paolo served a 30-day notice to quit, as permitted by the parties’ employment agreement.
Ultimately, De Paolo filed an unlawful detainer lawsuit, and the trial court granted De Paolo judgment for possession. Rosales and Charlemagne appealed, arguing that the Tenant Protection Act of 2019 (TPA) prohibited De Paolo from terminating their occupancy with a 30-day notice.
What is the California Tenant Protection Act?
Effective Jan.1, 2020, the TPA limits annual rent increases statewide and, in certain circumstances, requires an “at fault-just cause” reason to evict a tenant from residential properties. The City of Los Angeles imposed even stricter requirements on landlords through the Just Cause Ordinance and subsequent amendments.
Both the trial court and the California Court of Appeals disagreed with Rosales’s claim that the TPA protected her. The Court of Appeal held that “[i]n order to qualify as a tenancy within the meaning of the TPA, the occupant’s occupation of the premises must be lawful. After Rosales was terminated from her position as resident manager, and the 30-day period established in the resident manager’s agreement elapsed, her occupancy of the premises became unlawful.”
What Employers and Rental Property Owners Should Know
De Paolo affirms that a resident manager does not acquire the rights of a tenant when the employer provides onsite housing as part of, and contingent on, continued employment. The decision emphasizes the importance of a clear and thorough agreement that specifies the nature of employment and conditions housing on continued employment.
Consulting experienced legal counsel can help employers and property owners navigate employment housing arrangements and prevent disputes from escalating into litigation.
Nicholas Kanter is Chair of Lewitt Hackman’s Business Litigation Practice Group and a Shareholder in the Firm’s Employment Practice Group.