EMPLOYEE EXEMPTION
FROM LICENSURE

The Real Estate Commission is constantly being asked whether the employees of property owners who are selling or leasing the owners' property are required to hold real estate broker or salesman licenses. Although the Real Estate License Law does, under certain limited circumstances, exempt ~employees" from the licensure requirement when selling or leasing real estate owned by their employers, this exemption provision has occasionally been misinterpreted to include a wider range of situations.

For example, some persons have argued that regular, salaried employees of a person, partnership or other business entity who manage their employers personally-owned rental properties should be exempt from licensure. However, since they are, in fact, Leasing or offering to lease" real estate for others for compensation, these employees do fall within the definition of real estate "broker" or "salesman".as set forth in the Real Estate License Law; therefore, licensure by the Real Estate Commission is mandatory

There is, however, one exception to this requirement: A salaried employee of a corporation who, in the regular course of conducing the corporations business, rents or sells real estate owned by the corporation, can be exempt from licensure The Real Estate Commission has acknowledged and maintained this position for many years. However, this exception to licensure is limited only to bona fide salaried emplc~ees of a corporation. It is not extended to independent contractors associated with a corporate employer. It is, therefore, essential that employees of corporate owners of real estate clearly fall within the definition of ~employee" in order to avail themselves of this exemption from licensure

Under a traditional employer-employee relationship the employer supplies the employees with the materials, tools, etc. necessary for the completion of the employee's work The employer also has the right to control the manner or means by which the employee performs the work Furthermore, the employer must:

1. compensate the employee in a manner other than on a ~per transaction" basis; and

2. deduct FICA contributions from the employees compensation; and

3. make Unemployment Insurance contributions on behalf of the employee; and

4. provide Workers Compensation Insurance for the employee; and

5. withhold Federal and State income taxes from all compensation paid to the employee.

Again, only the employees of a corporation are eligible for this exemption from licensure, and only then if they clearly fall within the definition of "employee" as described above.