BILL NUMBER: AB 2169 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 23, 2014
AMENDED IN ASSEMBLY APRIL 10, 2014
INTRODUCED BY Assembly Member Cooley
(Principal coauthor: Assembly Member Bonilla)
FEBRUARY 20, 2014
An act to amend Section 10032 of, and to add
Section Sections 10032.1 and
10032.2 to, the Business and Professions Code, and to
repeal Section 2 of Chapter 679 of the Statutes of 1991,
relating to real estate.
LEGISLATIVE COUNSEL'S DIGEST
AB 2169, as amended, Cooley. Business and professions.
Existing law, the Real Estate Law, governs the licensure and
regulation of real estate salespersons and real estate brokers.
Existing law requires all obligations under the Real Estate Law, all
regulations issued by the Real Estate Commissioner relating to real
estate salespersons, and all other obligations of brokers and real
estate salespersons to members of the public to apply regardless of
whether the real estate salespersons and the broker to whom he or she
is licensed have characterized their relationship as one of
"independent contractor" or of "employer and employee."
Existing law authorizes a real estate broker and a real estate
salesperson licensed under that broker to contract between themselves
as independent contractors or as an employer and employee, for the
purposes of their legal relationship with, and obligations to, each
other. Under existing law, the characterization of a relationship as
either "employer and employee" or "independent contractor" for
purposes, including, but not limited to, withholding taxes on wages
and unemployment compensation is governed by certain specified
provisions of law. Existing uncodified law prohibits the above
provisions from being interpreted or applied to affect existing
obligations of a real estate broker regarding liability or workers
compensation insurance or from altering existing case law.
This bill would clarify that the characterization of a
relationship of a real estate broker and a real estate salesperson
licensed under that broker as either "employer and employee" or
"independent contractor" is conclusive for statutory, regulatory, or
common law purposes, if certain statutory requirements are satisfied.
The bill would state findings and declarations and the intent of the
Legislature in this regard.
This bill would recast and codify the provision relating to the
interpretation and application of law on existing obligations of a
real estate broker, as described above. The bill would also state
findings and declarations and the intent of the Legislature to
reiterate the application of existing law regarding the validity and
enforceability of the election made by the parties to a real estate
retention agreement to characterize their relationship as one of
"independent contractor" or "employer and employee."
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10032 of the Business and Professions Code is
amended to read:
10032. (a) All obligations created under Section 10000, and
following, all regulations issued by the commissioner relating to
real estate brokers and real estate salespersons, and all
other obligations of brokers and real estate salespersons to members
of the public shall apply regardless of whether the real estate
salesperson and the broker to whom he or she is licensed have
characterized their relationship as one of "independent contractor"
or of "employer and employee."
(b) A real estate broker and a real estate salesperson licensed
under that broker may contract between themselves as independent
contractors or as employer and employee. The
characterization employee, for purposes of their legal
relationship with and obligations to each other. Characterization
of a relationship as either "employer and employee" or
"independent contractor" shall be conclusive for statutory,
regulatory, and common law purposes if the requirements of
for statutory purposes, including, but not limited to,
withholding taxes on wages and for purposes of unemployment
compensation, shall be governed by Section 650 and Sections
13000 to 13054, inclusive, of the Unemployment Insurance
Code are met. Code. For purposes of
workers workers ' compensation the
characterization of the relationship shall be governed by Section
3200, and following, of the Labor Code.
SEC. 2. Section 10032.1 is added to the
Business and Professions Code , immediately
following Section 10032 , to read:
10032.1. Section 10032 shall not be interpreted or applied to
affect the obligation or ability, if any, of a real estate broker to
maintain workers' compensation insurance, or the holding in Gipson v.
Davis Realty Co. (1963) 215 Cal.App.2d 190, that a real estate
broker may be vicariously liable under the doctrine of respondeat
superior for tortious acts of a salesperson licensed under that
broker; and further, that real estate salespersons cannot be
classified as independent contractors for purposes of liability to
third parties, and that any provision in a contract that purports to
change that relationship from that of an agent to independent
contractor is invalid as being contrary to law for purposes of tort
liability to third parties.
SEC. 2. SEC. 3. Section
10032.1 10032.2 is added to the Business and
Professions Code, immediately following Section 10032
10032.1 , to read:
10032.1. 10032.2. (a) It is the
intent of the Legislature in enacting the amendments to
Section 10032 that the codification of Section 2 of
Chapter 679 of the Statutes of 1991 made by Assembly Bill 2169
of the 2013-14 Regular Session to restate existing law for
purposes of clarification and is to reiterate
the application of existing law regarding the validity and
enforceability of the election made by the parties to a real estate
retention agreement to characterize their relationship as one of
"independent contractor" or "employer and employee."
(b) The Legislature finds and declares all of the following:
(1) The real estate marketplace is an important part of California'
s economy. The continued smooth functioning of the existing
marketplace model of supervising real estate brokers and real estate
salespersons is important in order to avoid a disruption of the
market, which could result in a significant negative effect on
California's economic recovery.
(2) The retention relationship of real estate brokers and real
estate salespersons is unique and operates under a special statutory
scheme, the Real Estate Law, and the implementing regulations of the
Real Estate Commissioner, notwithstanding the general statutory
provisions that govern employment relationships.
(3) The contractual relationship of nearly 300,000 real estate
salespersons and their ongoing retention is put at risk if they and
their affiliated offices cannot be confident in the validity and
enforceability of their choice to characterize their relationship as
one of "independent contractor" or of "employer and employee" under
their retention agreement.
(4) The overwhelming majority of real estate salespersons and real
estate brokers have relied in good faith upon the ability to make
the choice to characterize their relationship as one of "independent
contractor" for all statutory purposes, with the understanding that
their choice is conclusive as to the characterization of their legal
relationship, as allowed pursuant to Section 10032, by satisfying the
three-part criteria set forth in Section 650 and Sections 13000 to
13054, inclusive, of the Unemployment Insurance Code, and related
portions of the Real Estate Law, which governs
govern the applicability of certain Labor Code provisions.
(5) The amendments made to Section 10032 by
codification of Section 2 of Chapter 679 of the Statutes of 1991
made by Assembly Bill 2169 of the 2013-14 Regular Session
do does not change the rights and
obligations of either real estate brokers or real estate salespersons
under Section 650 and Sections 13000 to 13054, inclusive, of the
Unemployment Insurance Code, or the characterization of their
respective relationship for purposes of workers' compensation under
Section 3200, and following, of the Labor Code.
SEC. 4. Section 2 of Chapter 679 of the Statutes
of 1991 is repealed.
SEC. 2. This act shall not be interpreted or
applied to affect the obligation or ability, if any, of a broker to
maintain workers compensation insurance, or the holding in Gibson v.
Davis Realty Co. (1964) 215 Cal. App. 2d 190, that a real estate
broker may be vicariously liable under the doctrine of respondeat
superior for tortious acts of a salesperson licensed under the
broker; and further, that real estate salespersons cannot be
classified as independent contractors for purposes of liability to
third parties and that any provision in a contract which purports to
change that relationship from that of an agent to independent
contractor is invalid as being contrary to law for purposes of tort
liability to third parties.