Amended in Assembly April 10, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2169

Introduced by Assembly Member Cooley

(Principal coauthor: Assembly Member Bonilla)

February 20, 2014

An act to amend Section 10032 of begin insert , and to add Section 10032.1 to, end insert the Business and Professions Code, 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 begin delete instead would require the contractual end delete begin insert would clarify that the end insert 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” begin delete to be end delete begin insert is end insert conclusive begin delete , except as provided, for all purposes, including, but not limited to, withholding taxes on wages, unemployment compensation, and all other statutory, regulatory, common law, and contractual purposes end delete begin insert for statutory, regulatory, or common law purposes end insert , if certain statutory requirements are satisfied. begin insert The bill would state findings and declarations and the intent of the Legislature in this regard. end insert

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 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 begin delete employee . Except as provided in
subdivision (a) and for purposes of workers compensation, the
contractual end delete begin insert employee. The end insert characterization of a relationship as
either “employer and employee” or “independent contractor” shall
be conclusive for begin delete all end delete begin insert statutory, regulatory, and common law end insert
purposes begin delete , including, but not limited to, withholding taxes on wages,
unemployment compensation, and all other statutory, regulatory,
common law, and contractual purposes, end delete if the requirements of
Section 650 and Sections 13000 to 13054, inclusive, of the
Unemployment Insurance Code are met. For purposes of workers
compensation the characterization of the relationship shall be
governed by Section 3200, and following, of the Labor Code.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 10032.1 is added to the end insert begin insert Business and
Professions Code end insert begin insert , end insert immediately following Section 10032 begin insert , to read: end insert

begin insert

begin insert 10032.1. end insert   

(a) It is the intent of the Legislature in enacting the
amendments to Section 10032 made by Assembly Bill 2169 of the
2013-14 Regular Session to restate existing law for purposes of
clarification and 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 the applicability of certain Labor Code
provisions.

(5) The amendments made to Section 10032 by Assembly Bill
2169 of the 2013-14 Regular Session do 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.

end insert