Real Estate Agent Exemptions From Stringent Limits  on Independent Contractor Status

New Labor Code 2750.3(d), effective January 1, 2020 as part of Assembly Bill (AB) 5, exempts real estate licensees, regulated under the Business & Professions Code (B&P), from the strict  Dynamex ABC test for independent contractor classification.  See, Dodging the Bullet (October 2019).

Labor Code 2750.3(d) defers to B&P 10032(b), which permits real estate brokers and agents to structure their relationships either as employer-employee, respectively, or as hirer-independent contractor.  However, that provision of 10032(b) notably does not apply where broker and agent have no written contract between them. For such “non-10032(b)” real estate broker-agent associations:

  • Unemployment Insurance Code 650 will render such agents ineligible for unemployment, as “real estate salesperson” is excluded from the definition of “employment”;
  • brokers must provide workers compensation coverage for such agents; and
  • for all other labor issues (e.g., obligations to pay minimum wage, meals/breaks, overtime), B&P 10015.1 directs a modified factor-balancing Borello test to determine employee or contractor status. Unique to the real estate field, brokers are obligated by statute to supervise agents under them. However, the statute also provides that such supervision does not count to nullify the agent’s otherwise possible independent contractor status.

Moral: As the complexity and uncertainty of California’s employee/independent contractor law increase, so too the wisdom of utilizing competent legal counsel to help navigate the rocks and shoals of such classifications.

See also:

For further information, please contact Tim BowlesCindy Bamforth or Helena Kobrin.

Helena Kobrin

November 22, 2019

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