Beverly Hills-based Compass agent Yawar Charlie said he was relieved to learn that California’s real estate brokers will be exempt from a statewide measure reclassifying independent contract workers as employees.
“Part of the draw for us in this industry is that we really get to run and create our own business,” he said. “I don’t want that autonomy taken away from me.”
Roughly 1 million contract workers in the state, including Uber and Doordash drivers and other gig economy hustlers, will be given employee status under the bill the state legislature passed this week. That would include the requisite health and other benefits; Gov. Gavin Newsom is expected to sign the bill into law.
Uber drivers and other gig economy workers were among those who pushed for the measure. But real estate agents have long maintained their status as independent contractors while also working for brokerages. Unlike drivers, the real estate industry was not pushing for change.
The California Association of Realtors, which includes more than 170,000 agents, also supported the decision to exclude brokers, spokesperson Lotus Lou said.
Some brokerage owners said they were also glad the measure won’t apply to them. They share the same concerns as other business owners, that reclassifying contract workers as employees would mean paying into health care plans among other costly employee benefit obligations.
“With profit margins increasingly thin, this would have had a devastating impact on our industry,” said Billy Jack Carter, general manager at Hilton & Hyland.
Though the measure does not apply to agents now, it could potentially affect how large teams tied to brokerages conduct business, Carter said. “It could become a breeding ground for lawsuits,” he said.
Reclassifying agents, Hilton & Hyland co-founder Jeff Hyland said, would have been a “logistical nightmare.”
Real estate agents will instead be subject to an “economic realities test” to determine worker status, according to the measure, called Assembly Bill 5.
The California Department of Industrial Relations says that “the most significant factor to be considered is whether the person to whom service is rendered — the employer or principal — has control or the right to control the worker both as to the work done and the manner and means in which it is performed.”
The bill also exempts securities brokers, commercial fishermen, and cosmetology workers, among other workers.
Charlie, who is part of the Aaron Kirman Partners team, said being a contractor also has tax benefits. There are certain expenses that agents are allowed to write off, he said. That could change if the person is required to complete a W-2 form.
Fellow Compass agent Mary Brill was also not in favor of becoming an “employee.”
“I do not want to be governed by any company, and appreciate the independence this bill allows,” she said. “Not having this exemption would open me to fixed hours and manager supervision. I like being a free agent.”