California Real Estate Broker ExaminationAgencyEasy
A real estate salesperson is working under a broker and is compensated solely by commission, without set hours, and is responsible for their own expenses and taxes. This type of relationship is most accurately defined as:
- AEmployee
- BIndependent Contractor
- CSubagent
- DDesignated Agent
Show answer & explanationAnswer & explanation
Correct answer: B. Independent Contractor
The characteristics described—paid by commission, no set hours, responsible for own expenses and taxes—are all hallmarks of an independent contractor relationship in real estate, rather than an employer-employee relationship.
Why the other options are wrong
- A. An employee typically has set hours, receives a salary or hourly wage, and has taxes withheld.
- C. A subagent is an agent of an agent, typically representing the seller through the listing broker, but doesn't define the employment status.
- D. A designated agent is a licensee authorized by a broker to act as the agent for a specific principal in a dual agency situation; it's an agency role, not an employment status.
Independent Contractor (Real Estate)
A real estate licensee who operates with a high degree of independence from their broker regarding work methods, hours, and expenses, and is compensated by commission, with the broker primarily controlling the results of the work.
- Paid by commission, not salary/hourly
- Responsible for own expenses and self-employment taxes
- Sets own hours and methods of work
- Broker controls only the results of the work, not the means
Memory trick: Independent contractors drive their own careers, always in control.