Skip to main content

What does California Assembly Bill 5 (AB5) mean for the Real Estate Industry?


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

Labels:
Location: Brea, CA, USA

Comments

Post a Comment

Popular posts from this blog

Real Estate Investments: Invest Up

I want to speak briefly to the masses today. Normally our audience is the Buyer and Seller, and yet it is easy enough for anyone to become both. It could even happen that you are a Buyer, Seller, and Investor at the same time! How can this be? Me, a normal person can be a Investor? Yes. Even more than that, as soon as you start your journey you start doing something greater than yourself, building generational wealth. Let's start at the very beginning, a very good place to start. This beginning looks like a house purchase. That would be because it is a house purchase. Assuming you are buying this house to rent out, you are now a Landlord and Investor. The first house is going to be the scariest, it gets easier from there. Let's assume you have rented out the house for a couple of years and you are looking to upgrade from a Single Family Residence to a Duplex. You would sell your Single Family Residence and 1031 the proceeds of the sale into the purchase of the duplex. Yo...
Post a Comment
Read more

Your First Home: Step 8-Protect Your Investment

Welcome to the world of home ownership, besides feeling like you signed your life away-how does it feel? You may find yourself feeling pride of ownership, because you now in fact own something. But with great power comes great responsibility-home maintenance. One of the best resources for you, even after the transaction, is going to be your real estate agent. Chances are, if you need a specific kind of vendor-they have one they trust and can refer you to. Home maintenance falls into two categories: Keep it clean and keep an eye on it. Review the maintenance needs for your home once you are settled in plan for regular service. If you notice something different, investigate it and fix it. A small problem not treated turns into a massively more expensive problem when ignored. Be sure to also read your home warranty, some of the repairs that come up may be covered. Also, have reserves set up for “Life Happens” situations. Finally, the most important part, Housewarming Party! Nothing w...
Post a Comment
Read more

Why Real Estate is Such a Good (Great) Investment: Part 5-(Can we) Build it (yes we can!)

This is the next installment of a 7 part series exploring ideas of why real estate is such a good investment. The focus will be on single family and multifamily real estate, but a good idea is a good idea, enjoy.  Building is a straightforward way to add value. There are really two classifications of it. Either remodeling or constructing. In terms of remodeling, as mentioned in a prior post, it is important to find a 'quarterback' that knows what and who to ask. Improvements should be thought of in terms of how much value it will bring, it has been said that kitchen and bathrooms are the highest return on investment. https://www.remodeling.hw.net   has a very good annual report ( linked here for Los Angeles, see last page ), some highlights is that a MINOR kitchen remodel returns 105% of the money put in. Other things include the expected, Grand Entrance (108.1%), Garage Door (123.8%) and perhaps unexpected, Deck Addition, wood (98.8%), Windows, double pane (102.6%)New ...
Post a Comment
Read more