An oft discussed topic for old fogey real estate
professionals that the young ‘uns should pay attention to is the special status
that real estate agents have as independent contractors. In this country, Real
Estate is a protected industry, mainly because it is seen politically as the
main step in the ladder to the middle class. This has affected mortgage policy
and real estate agents, they have been purposely given generous terms.
The point of bringing these points up is that real estate
does not exist in a vacuum, and it cannot exist as it does today without
massive government backing, through regulation, taxation and legislation. The
recent signing of Assembly Bill 5 (AB5) is a step to close this. Though the
purpose of the bill is to target the ‘gig economy’ of Uber, Lyft, Doordash,
Postmates and hundreds of others, there was a special exception for certain
types of workers, including real estate.
This policy codifies an earlier legal decision from the
California Supreme Court (Shorthand Dynamex)
that redefines a specific set of criteria for someone to be considered an
independent contractor versus an employee, there was a radically re-written set
of rules for a company to follow.
Essentially, the bill would require companies to use a legal standard
called “the ABC test” when determining employment status:
A): The worker is “free from the control and direction” of
the company that hired them while they perform their work.
(B): The worker is performing work that falls “outside the
hiring entity’s usual course or type of business.”
(C): The worker has their own independent business or trade
beyond the job for which they were hired.
So, who benefits from this? As I learned from my mother,
“when you do not understand someone’s motivation, follow the money”. According
to the Los
Angeles Times, the state “lost” about $7 Billion in payroll taxes in 2017.
Is it more likely the state is trying to “help workers” or to fill the general
fund? Another cynical outlook is that the state wants to put this into State
statute so that the state of California can sue an employer directly, rather
than relying on workers themselves to start litigation. It is another
continuation of the state believing they know better for adult citizens than
they do for themselves.
Real Estate agents are exempt for now, as well as a few
other industries, such as law offices, doctor’s offices and accountants. The
40M witnesses in the great state of California are watching, as is the country,
on has far these changes will be pushed.
Orange, CA-TRREG DRE#01843673-RP100 DRE#02059058-P:714-831-1800-E:info@theresultsrealestategroup.com-W:www.theresultsrealestategroup.com-Facebook - Twitter - Instagram - LinkedIn
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