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Real Estate Assistants Are Often Misclassified As Independent Contractors


Written By: Bob Hunt
Wednesday, May 14, 2014

It has become commonplace for high-producing real estate agents or teams to have one or more assistants. Sometimes these assistants are licensed real estate agents themselves, sometimes not. In either case, what has unfortunately also become commonplace is for these persons to be mis>

The motivations for such mis>

There are a number of both state and federal tests to determine whether or not a >

In California, real estate agents often seek to hire real-estate licensed assistants, thinking that this will bring them under the general rule that makes real estate agents independent contractors for I.R.S. purposes. But this rule requires a three-element test: 1. The individual must be licensed. 2. There must be a contract between broker and agent. 3. Payment to the agent must be based on the results they produce i.e. commissions, not on a fixed wage or time-based scale. Usually, the >

The California Association of REALTORSCAR provides a contract that can be used between an assistant and an associate licensee. It also produces a three-party agreement that can be used between a broker, an associate licensee, and an assistant to the associate licensee. In both it is clear that the assistant is, with respect to the associate licensee, an employee. For example, the agreement provides for the associate licensee to identify his workers compensation carrier.

Some think that they can legitimize the independent contractor status of an assistant by creating a contract wherein the parties can agree that the assistant will be an independent contractor. This is simply not the case.

It is not a good idea to attempt to dodge around this issue, as many agents may be inclined to do. A few years ago, The U.S. Department of Labor signed agreements with Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah, and Washington to work together to target employers who are guilty of mis>

The State of California is estimated to have lost in the neighborhood of 7 billion in tax revenues over the years as a result of mis>

A California employer who is found to have willfully mis>

Agents who have assistants, and brokers who have agents with assistants, would all do well to review their employment agreements and practices.

Bob Hunt is a director of the California Association of Realtors. He is the author of Real Estate the Ethical Way.



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