Massachusetts Case Does Not OK Classifying Personal Assistants As Independent Contractors

two women working

From RealtyTimes, Bob Hunt discusses the recent Massachusetts which said that realtors could be classified as independent contractors and its relationship to classifying real estate assistants as independent contractors, particularly in California.  Bob writes:

The motivations for such misclassification are fairly obvious. No withholding is paid on behalf of independent contractors. Generally, workman’s compensation is not paid either. There are also other payments an employer is required to make for employees but not for independent contractors. Perhaps even more important to many is that there is simply a whole lot less paperwork involved if a provider of service is treated as an independent contractor rather than as an employee.

There are a number of both state and federal tests to determine whether or not a relationship is one of principal/independent contractor rather than employer/employee. Most of these have to do with control. In general, if the individual is subject to the principal’s instructions about when, where, and how to work, the person is probably an employee. Are the worker’s expenses reimbursed? If so, he or she is probably an employee. Can the worker make a profit or sustain a loss? If so, he or she is probably an independent contractor. The lists of questions go on and on.

In California, real estate agents and teams often seek to hire real-estate licensed assistants, thinking that this will bring them under the general rule that allows real estate agents to be classified as independent contractors for I.R.S. purposes. But this rule requires a three-element test:

  1. The individual must be licensed.
  2. There must be a contract between broker and agent.
  3. Payment to the agent must be based on the results they produce (i.e. commissions), not on a fixed wage or time-based scale.

Usually, the relation between the assistant and the associate licensee who hires the assistant will lack this third element. Assistants are generally paid on an hourly basis or at a fixed wage, sometimes with a bonus element.

Read the full story at Massachusetts Case Does Not OK Classifying Personal Assistants As Independent Contractors.

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