You’re Fired! Evicting a former employee.

Today, we consider a rare situation: Most landlord-tenant relationships involve exchanging money for a residence. But how does one evict when the home is a benefit of a job? Suppose the “tenant” receives the right to use an apartment because the apartment owner employs the tenant; what happens when the employer terminates the relationship or the employee quits? Today, we review the statutes and the caselaw to answer those questions. Landlords will most frequently see this situation where they employ an onsite property manager.

Apartments of certain sizes are required to have an onsite property manager, and the property manager usually receives permission to live onsite as a condition of their employment. Although the onsite manager need not live at the apartment complex, it is often mutually beneficial to have a manager present twenty-four hours per day and seven days per week.

I will start with the Civil Code. I’ll discuss what this very complex and long sentence means in the following sections. The Civil Code states:

A tenant of real property . . . is guilty of unlawful detainer . . . (1.) [w]hen the tenant continues in possession, in person or by subtenant, of the property, or any part thereof, after the expiration of the term for which it is let to the tenant; provided the expiration is of a nondefault nature however brought about without the permission of the landlord . . .; including the case where the person to be removed became the occupant of the premises as a servant, employee, agent, or licensee and the relation of master and servant, or employer and employee, or principal and agent, or licensor and licensee, has been lawfully terminated or the time fixed for occupancy by the agreement between the parties has expired; but nothing in this subdivision shall be construed as preventing the removal of the occupant in any other lawful manner; but in case of a tenancy at will, it shall first be terminated by notice, as prescribed in the Civil Code.

(Code Civ. Proc., § 1161.)

No Notice Required

We will unpack this in parts. One of the critical differences between Paragraph 1 of Section 1161 and Paragraphs 2, 3, 4, and 5 of Section 1161 is that Paragraph 1 does not include a notice requirement. Generally, the other paragraphs of Section 1161 require “three days’ notice, excluding Saturdays and Sundays and other judicial holidays, in writing, requiring [some action by tenant].” The only text requiring notice in Paragraph 1 regards a tenancy-at-will (when the landlord rents without any specific term saying ‘you can live here as long as you wish, as long as you do [tenant action here]’). Then, the notice is only required to terminate the tenancy at will. (Civ. Code, § 1161, par. 1.)

Paragraph 1 states that a landlord-tenant relationship may exist due to a master-servant, employer-employee, and licensor-licensee relationship. (Civ. Code, § 1161, par. 1.) When it exists in this manner, the “lawful termination” of that relationship or the relationship coming to a natural end gives the landlord cause for an “unlawful detainer” action. (Civ. Code, § 1161, par. 1.) In other words, as long as the relationship ended lawfully, the landlord can file for eviction without a separate notice regarding the time to leave (as is available under Paragraph 4) or an opportunity to fix the problem (available under Paragraphs 2 and 3). (Civ. Code, § 1161, pars. 2, 3, & 4.)

The former employer should provide the tenant a 3-day notice to quit for the reasons stated below. Although not technically required under Paragraph 1, there are sometimes cases where a case can fall under Paragraph 1 and Paragraph 3. By serving the 3-day notice to quit, the landlord protects themselves against a failure to evict for improper notice.

Peaceful Removal

It’s unreasonable to expect a person to move immediately. Unless the apartment is fully furnished, the former employee needs time to pack their belongings and find either an alternative residence or storage. For this reason, Paragraph 1 includes the text: “nothing in this subdivision shall be construed as preventing the removal of the occupant in any other lawful manner. . .”

While Civil Code section 1161 gives the former employer permission to file an action in court immediately, the legislature signals its hope that the landlord and tenant will find an alternative arrangement that is less costly and mutually beneficial.

Consider the length of time that the employee has resided in the unit and what assistance is available (either provided by the former employer or for hire by the former employee) when determining how much time is reasonable to clear out the space.

If at all possible, try to avoid court. But, if the employee fails to act reasonably, you may use the unlawful detainer court, which has much faster timelines than other civil divisions.

In Vargas v. Municipal Court (1978) 22 Cal.3d 902, the employer terminated the employees on September 28, 1975, and October 4, 1975. Still, the employer gave each employee notice that they had until October 31 to vacate their employer-provided residences. I will discuss this case more below, but here, it is important to note that the employer attempted first to get a peaceful resolution and voluntary compliance. Although not required to give notice by the statute, the employer did give notice, and people who read the case continue to see this fact in favorable light.

Question the Nature of the Landlord-Tenant Relationship

Not all situations involving an employer and an employee will qualify as a landlord-tenant relationship. Consider a situation where an employee has a lease agreement that requires them to pay rent every month. In that situation, the employee does not come into possession of the apartment as a benefit of their employment. They likely come into residence in exchange for their ability to pay. If the tenant continues to pay the rent, the Court may prevent the former employer from evicting the former employees under Paragraph 1 of Section 1161.

Nork v. Pacific Coast Medical Enterprises, Inc. points out that “it is proper in an unlawful detainer suit for the tenant to challenge the existence of the landlord-tenant relationship.” (Nork v. Pacific Coast Medical Enterprises, Inc. (1977) 73 Cal.App.3d 410.) I have found no cases directly on point. However, if I defended a former employee who paid rent and possessed a lease agreement, I would claim that the lease agreement was separate and distinct from the employment agreement. In other words, until the tenant stops paying rent or otherwise violates the lease, the landlord may not evict.

Knowing that this ambiguity exists in the law, employers who charge rent and would like to make continued employment a condition of the lease should include language to that effect in the lease agreement. By having specific language requiring continued employment as a condition of the lease, the tenant breaches the lease terms when they become former employees.

In that specific and narrow circumstance, the former employer could then point out to the judge that it does not matter if the unlawful detainer action is supported by Paragraph 1 (termination of employment) or Paragraph 3 (break of a term of the lease). Because the breach is not curable, the action may move forward. [Note: Under Paragraph 3, you must still provide a 3-day notice to quit, so protect yourself by serving at least a 3-day notice.]

Lawful Termination is Required

Employers should take steps to properly document the termination and ensure that their termination procedures are airtight. Consult an employment lawyer if necessary. As the following case shows, a claim of wrongful termination can delay an unlawful detainer action.

Civil Code section 1161 specifically limits Paragraph 1 to situations where the relationship terminates “lawfully.” The court in Vargas v. Municipal Court, supra, 22 Cal.3d 902 deals with this issue. The employer terminates two employees on September 28, 1975, and October 4, 1975. The employer gives the tenants notice to vacate by October 31. However, the employees file a complaint with the labor relations board on October 22, 1975. The question before the court is: what should the court do when the lawfulness of termination is currently in dispute?

In Vargas, the trial court postponed the unlawful detainer action until the completion of the labor relations dispute. The landlord filed his case on November 3, 1975. The tenants demurred alleging that the landlord failed to claim that they were “lawfully terminated.” The landlord then refiled making that specific allegation.

On December 4, 1975, the tenants then asked the court to stay (hold off) on the unlawful detainer action until the labor relations board resolved the labor dispute. The court agreed to stay proceedings until December 22, 1975, which was the next known hearing date for the labor issue.

On December 22, the tenants again asked the unlawful detainer court to wait, but the court moved forward and evicted them after a trial on the merits on March 11 and 12, 1976. At the time of trial, the labor-relations matter was still ongoing. The trial court excluded all evidence pertaining to the labor board’s ongoing hearings upon which the labor board might make a finding.

The tenants appealed and claimed that Section 1161 requires proof of lawful termination, and thus their rights had been violated when the court evicted them without waiting for a finding on that fact. The Supreme Court of California reviewed the case to determine how Courts should resolve such problems in the future.

The tenants argued that the Municipal Court was required to give consideration to the lawful termination claim and that they did not. However, the Supreme Court found that the Municipal Court did consider that claim:

As we have seen, after being informed that the ALRB was conducting an administrative hearing on one of the principal issues involved in the unlawful detainer action, the municipal court did not simply ignore those proceedings and immediately set the unlawful detainer action for trial. Instead, the court proceeded deliberately, postponing the unlawful detainer trial on several occasions in order, presumably, to afford the ALRB a reasonable period of time to resolve the related unfair labor practice charges. . . .

It was not until four months had elapsed, and no decision of the ALRB had either been rendered or could reasonably be anticipated in the near future, that the municipal court finally determined that the unlawful detainer trial should no longer be postponed. Although the employees claim that even under these circumstances the preemption principles set forth in the federal precedent precluded the municipal court from acting, the employees have cited no federal decision, and our independent research has disclosed none, that holds that the NLRB’s exclusive jurisdiction over charges of unfair labor practices bars a state court from adjudicating an unlawful detainer action in circumstances similar to those presented in this case.

(Vargas v. Municipal Court, supra, 22 Cal.3d 902, 911–912.)

Given the above, the Supreme Court held that an unlawful detainer court must give a reasonable time to settle the labor dispute before continuing with the unlawful detainer action. In Vargas, the reasonable amount of time (given all the facts) was four months.

What this means for employers is this: To ensure a speedy resolution, ensure that your human resource policies and documentation are airtight so that the labor-relations claim can be avoided or dispensed with more quickly.

Who to Call for Unlawful Detainer Actions in Kern County

If you have an unlawful detainer issue in Kern County, please call Coleman & Horowitt, LLP, at 661-325-1300. Ask to speak with Jared R. Clemence.