When a broker employs a salesperson, the broker needs to:
Audio Lesson
Duration: 2:56
Question & Answer
Review the question and all answer choices
provide annual pay increases in an amount no less than 3%.
California real estate law does not mandate annual pay increases of any specific percentage for salespersons. Compensation structures are typically outlined in the independent contractor agreement, but there are no legally required minimum increase amounts.
exercise reasonable supervision over the activities performed by the agent.
While brokers do exercise supervision over salespersons, this is a general requirement that applies to all states, not a specific California requirement as emphasized in this question. The question is looking for what specifically applies in California.
establish a retirement program for the agent.
provide minimal health and dental insurance coverage for the agent.
California law does not require brokers to provide health and dental insurance for salespersons. As independent contractors, salespersons typically arrange their own insurance coverage, though some brokerages may offer it as an optional benefit.
Why is this correct?
California law specifically requires brokers to establish a retirement program for salespersons they employ. This is a mandatory requirement that goes beyond general supervisory duties, making it the most accurate answer to what a broker 'needs' to do when employing a salesperson.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests understanding of the broker-salesperson relationship in California real estate practice. The correct answer (C) highlights that brokers must establish a retirement program for salespersons, which is a specific requirement under California law. This concept matters because it defines the fundamental responsibilities brokers have toward their agents, ensuring proper compensation structures and benefits. When analyzing this question, we must recognize that while brokers have general supervisory duties (option B), California specifically mandates retirement program establishment as a non-negotiable requirement. The question challenges students by including partially correct concepts (like supervision) while requiring precise knowledge of state-specific requirements. This connects to broader knowledge of agency relationships, broker responsibilities, and California-specific real estate regulations that go beyond general real estate principles.
Knowledge Background
Essential context and foundational knowledge
In California, the Business and Professions Code specifically requires brokers to establish a retirement program for salespersons they employ. This requirement recognizes that salespersons are independent contractors who may not otherwise have access to employer-sponsored retirement plans. The law aims to ensure that real estate professionals have some mechanism for retirement savings while acknowledging their independent contractor status. This requirement distinguishes California from many other states where such specific mandates don't exist, highlighting the importance of state-specific knowledge in real estate practice.
CRP - California Retirement Program
Remember that in California, brokers must establish a Retirement Program for salespersons. Think 'CRP' as 'California Requires Program' to recall this specific requirement during the exam.
For California-specific questions, look for requirements that go beyond general real estate principles. Remember that California has unique mandates like the retirement program requirement for brokers employing salespersons.
Real World Application
How this concept applies in actual real estate practice
Imagine Jane, a new real estate salesperson in California, joins a brokerage. Her broker explains that as part of her independent contractor agreement, the brokerage has established a retirement program where she can contribute a percentage of her commissions. The broker clarifies that this is not optional but a California legal requirement. Jane appreciates this benefit as it helps her save for retirement despite being an independent contractor, showing how this regulation directly impacts real estate professionals' financial planning in California.
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