Question and Answer Regarding Workers’ Compensation Insurance

Question:  Is a broker responsible for providing workers’ compensation insurance for agents, given that agents are independent contractors?

Answer:  Yes.  By law, all employers in California are required to maintain workers’ compensation insurance for their employees for injuries occurring during their employment.  While independent contractors are generally excluded from coverage, the California Labor and Workforce Development Agency has taken the position that a real estate salesperson is nearly always considered an employee for workers’ compensation insurance purposes.  Therefore, it is recommended that brokers obtain workers’ compensation insurance for agents.  If there is a violation of workers’ compensation laws, the penalties can be significant.  The California Labor and Workforce Development Agency can close a business for failing to provide workers’ compensation insurance.

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