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Are Real Estate Agents Employees or Contractors in California?

3/10/2013

4 Comments

 
real estate agent employee independent contractor
Generally, brokers may classify their real estate agents as employees or independent contractors in California. By special statute, a real estate agent may be treated as an independent contractor, even if, when considering the factors that determine employee/independent contractor classification, that agent should be treated as an employee. In other words, a real estate agent can be classifed as a contractor even if the nature of that agent's work and the degree of control that the broker exercises over that agent would otherwise make that agent an employee.

This is because California adopted a law in 1991 that applies specifically to real estate agents. This law has been enacted primarily in order to help brokers protect themselves from liability for their agents' negligent or intentional misrepresentation (fraud). While brokers may be held liable for their employees' negligence or fraud, they are generally not liable for the same conduct by their independent contractors.

Under this law - California Business and Professions Code 10032, a real estate agent will be considered an independent contractor if: (1) he is licensed as a real estate agent under the law; (2) his income depends substantially on the sales made rather than hours worked; (3) that agent performs work under the written contract or employment agreement that specifically states that the broker and the agent agreed that the agent will be an independent contractor.  

Being covered by workers compensation insurance, having set hours, using the broker's office and equipement, and having to attend mandatory trainings and meetings does not change the independent contractor relationship, which is otherwise set between the broker and real estate agent, assume that the above-referenced three criteria are met.

4 Comments
Ben Payne
7/28/2018 05:44:18 am

It is a challenging question for an individual to tell- whether the real estate agents are taxed as employees or independent contractors in California. Well, if the following conditions exist, then a real estate broker can be treated as an independent contractor.
1)The negotiator must have a real estate license.
2)The envoy must know how to compensate for the services performed in the estate globe by deriving substantially.
3)The proxy must have a written contract that will distinguish himself from the workers working under separate tax policies.
To get more clarification, you can consult an approved real estate agent directly- http://www.martinlandis.com/.

Reply
Charlie Smith link
6/24/2022 02:31:40 am

Generally, brokers may classify their real estate agents as employees or independent contractors in California.

Reply
https://thefieldhousegroup.com/ link
8/15/2022 11:06:13 am

This is a "must-read" piece, if I may say so! Amazing work. It's great, and the advice is quite helpful.

Reply
Payroll Specialist link
3/20/2023 08:31:39 am

Classifying employees and contractors can be difficult if your business opens in another state. I'm so grateful for AMS' W-2/1099 software for that reason. I can see multiple state and federal tax liabilities at any time using the View command.

Reply



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Law Office of Arkady Itkin - San Francisco & Sacramento Injury and Employment Lawyer
We represent employees and employers in employment and wrongful termination cases, as well as victims of serious injuries in San Francisco, Oakland, Sacramento, San Jose, Palo Alto, San Mateo and throughout Northern California. 


57 Post Street, Suite 812, San Francisco, CA 94104; Tel. (415) 295-4730; Fax. (415) 508-3474; arkady@arkadylaw.com
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