California Classifies Realtors As Independent Contractors

On September 18, California Governor, Gavin Newsom, signed Assembly Bill 5 into law in an attempt to reduce worker misclassification by limiting the scope of who may be categorized as independent contractors in the state. Upon signing, the law was clarified to identify the real estate industry as an exemption, by specifically excluding real estate agents from its coverage. What this means is that, effective January 1, 2020, real estate agents and brokers will not be subject to strict employee rules, which was a concern for many brokers in California. As discussed in our previous articles, various legal actions such as the 2013 California class action lawsuit, Bararsani v. Coldwell Banker, caused waves in the community when brokerages were sued for alleged violations of the California Labor Code. Starting in 2020, when dealing with real estate professionals, employment classification quandaries are potentially a thing of the past, at least for the time being.