 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.
19 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. 6/24/2022 02:31:40 am
Generally, brokers may classify their real estate agents as employees or independent contractors in California. 7/26/2024 07:09:20 pm
Interesting. I've considered opening a branch of our business in California someday and didn't know that. Guess it’s a good thing our software supports payments for both types of worker classification. 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. 2/13/2024 07:51:27 pm
Agreed. It also really drives home the importance of finding tax software that supports payroll and non-employee compensation. You'll save so much time and money versus needing multiple programs. 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. 6/8/2023 01:03:39 pm
This law has been enacted primarily in order to help brokers protect themselves from liability for their agents' negligent or intentional misrepresentation. Thank you for taking the time to write a great post! 8/29/2023 02:14:07 am
Wow for including the facts; this is an extremely helpful blog. Brokers in the Golden State of California have the option of classifying their real estate agents as either employees or independent contractors. A real estate agent may be considered an independent contractor rather than an employee due to a unique statute, even if the agent would otherwise meet the criteria for employee status. So, even if the real estate agent's duties and the broker's level of supervision make more sense for an employee classification, the agent may be classified as an independent contractor. I want more! As real estate agents, my partner and I chose contractor status for greater autonomy. But California's complex rules initially created confusion. This post clarifies the key factors determining classification. Meeting three core criteria—licensure, sales-based pay, and a written contract—lets brokers classify agents as contractors, even if other factors suggest employee status. We're relieved our contract granting contractor status provides legal protection, despite gray areas like required training. Navigating employment nuances as self-employed agents seemed daunting. But understanding the special real estate statue puts our minds at ease. We can grow our business with confidence thanks to insights demystifying contractor rules. 10/31/2024 11:27:40 am
This article does a great job of clarifying the employee versus contractor debate for California real estate agents. It’s helpful to understand how recent legal changes, like AB5 and case law, impact agent classifications. For anyone in the industry, especially brokers and agents, this information highlights important differences and what they mean in practice. Thanks for making this complex topic more accessible! 11/11/2024 07:44:41 am
Great post on the classification of real estate agents in California! The distinction between employees and independent contractors is crucial, especially when it comes to tax implications, benefits, and legal protections. The article provides helpful insights into the factors that determine a real estate agent's status, such as control over work and commission-based income. 11/12/2024 07:57:42 am
This blog post provides valuable insight into the classification of real estate agents in California, discussing whether they are employees or independent contractors. The post highlights the criteria under California's labor laws that determine this status, especially in relation to real estate brokerages and the agents they work with. Understanding these distinctions is crucial for both agents and employers in ensuring compliance with state regulations. 11/13/2024 06:29:54 am
The blog post on Arkady Law explores the distinction between real estate agents as employees or independent contractors in California, shedding light on the legal framework that governs these relationships. It highlights key factors like control, autonomy, and payment structure that determine classification. Understanding the legal implications for both agents and brokerages is crucial to ensure compliance. 11/14/2024 07:30:43 am
This blog post provides valuable clarity on whether real estate agents in California are considered employees or independent contractors. It outlines key legal distinctions based on the nature of the agent's work relationship with the brokerage, emphasizing the importance of understanding the criteria that define this status. 11/15/2024 05:45:10 am
The blog post discusses the distinction between employees and independent contractors in the context of California real estate agents. It explains that real estate agents are typically classified as independent contractors under California law, but the classification depends on specific contractual relationships and the level of control exercised by the brokerage. It highlights the legal implications of misclassification and provides guidance for brokers and agents on how to navigate these complexities. 11/19/2024 06:40:02 am
This article sheds light on the employment status of real estate agents in California, a crucial distinction for both agents and employers in the field. 11/20/2024 07:38:20 am
This blog explains the nuanced legal status of agents effectively. The clarity provided on their rights and responsibilities is essential for professionals navigating the industry. Leave a Reply. |
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