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If the employee is not regularly assigned to the location (CA) then the rent would not be considered taxable income to him. If CA is a regular assigned location for business then this is included in his taxable income.
For lodging to be exempt he would need to be on a temporary assignment or be under the rules for fringe benefit of lodging.
The lodging is exempt if:
Furnished on the business premises of your employer,
Furnished for the convenience of your employer, and
A condition of your employment. (You must accept it in order to be able to properly perform your duties.)
Paying the rental amount directly does not change the rules on the taxable income unfortunately.