Real estate businesses are required to report and pay for workers’ compensation insurance for all brokers working through the firm. While brokers are often considered independent contractors for other types of insurance and taxes, brokers are covered workers for L&I and all real estate firms must report and pay workers’ compensation insurance for all brokers licensed to the firm.
- If you do not currently have any brokers licensed to your firm, no action is required.
- If you already have an active account with L&I, but you’re not reporting your brokers, contact your account manager. If you don’t know who your account manager is, call 360- 902-4817 to ask. By voluntarily complying, you can amend and pay for the past four quarters of premium. We’ll waive the late penalties and interest.
- If you don’t have an active L&I account, refile the Business License Application at: Apply for a state business license and indicate that you are “hiring employees”. This will not impact your treatment of brokers as exempt independent contractors for all other purposes. Your account manager will call you with reporting instructions. By voluntarily complying, you can amend and pay for the past four quarters of premium. We’ll waive the late penalties and interest.
- If your business has brokers and you choose not to report, your business may be audited. An injured broker may file a claim. Negative audit findings will result in retroactive payment of premiums, late penalties, and interest. If you don’t have an active L&I account, and an unreported broker files a claim, your firm will be liable for premiums, penalties, interest, and all of the claim costs.
In 1993, the Court of Appeals ruled in the Peter M. Black Real Estate case that real estate sales agents fall under the industrial insurance definition of worker as defined by RCW 51.08.180 and RCW 51.08.195. The court noted that real estate sales agents provide labor only, can only work for one broker, share their commissions only through their broker, and are barred by statute from hiring others to perform their license function for the broker.
The Department of Labor and Industries doesn’t consider real estate brokers to be exempt independent contractors, and the managing or designated broker must report their hours.
Pick one of the following methods to report your real estate brokers. You must use the same method for all brokers:
- Actual hours worked, supported by daily time records, or
- Assume one hundred-sixty hours per month for full-time employees, or
- Assume eight hours per day for each day worked for part-time employees, supported by documentation tracking days worked by each employee.