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.
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.
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