A real estate salesperson employed as an independent contractor:
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passes no liability for their actions on to their employing broker.
does not need to be supervised by the broker.
Brokers retain supervisory responsibilities over salespersons, even when classified as independent contractors. California law requires brokers to ensure their agents comply with regulations and ethical standards, making supervision a requirement, not optional.
needs to pay income taxes and social security taxes.
As independent contractors, salespersons are responsible for paying their own income taxes and self-employment taxes (which include Social Security), rather than having these taxes withheld by their broker like traditional employees.
is not eligible for workers’ compensation insurance coverage.
In California, real estate licensees are considered employees for workers' compensation purposes regardless of their independent contractor status. The California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court (2018) reinforced this interpretation.
Why is this correct?
A salesperson employed as an independent contractor remains personally liable for their actions and cannot transfer this liability to their employing broker. This is a fundamental principle of independent contractor relationships, where the principal (broker) does not assume responsibility for the agent's independent actions.
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