I have heard differing opinions on this. Do you know if workers comp is required in california for loan officers?

W2 or 1099 would give you the answer. W2, yes....1099, no.

labor law says yes, EDD says no

VM....did you get confirmation directly from EDD that WC is not required in California for loan officers? If this is so, then the State Compensation Fund owes me premium refunds.

Their bill to me under Code No. 8743 encompasses "mortgage brokers, all employees, including clerical office employees and outside salespersons"

I have been audited by a rep of the State Comp Ins. Fund and, yes, licensed loan officers as well as licensed real estate agents must be covered by their broker for WC insurance.

If you have any thing in writing from EDD negating this, please let me know.

Hello, everyone i just start
ed my own brokership and want to know is it required to have workers comp. i plan to 1099 my employees, 1.what are the cost per employee? 2. Do you all have WC on your employees, i heard is expensive

calif dreaming. The 2006 EDD handbook under workers compensation specifically says brokers are not required to supply WC to their sales agents. However, I was told the labor law trumps this law. So i called a CAR attorney and he said it can go either way. The laws are vague for a reason. My advice, as well as the attorneys is to just get the insurance to play it safe.
I would however like to know how your audit went, what they looked for, what they found, and why you got audited (random or a red flag from something you did). I am interested in learning about the process.

So, would u get in trouble with the DRE for hiring loan officers not having WC insurance.

VM...I have not had the time to go on CAR's website to search regarding the WC requirements, but if you PM me with a fax #, I can fax you the directive I received from the Downey Association of Realtors. I also checked my file and found a letter dated 04/16/2004 from my insurance agent which stated the following:

"The California Labor and Workplace Development Agency has informed CAR that it intends to take aggressive action against any real estate broker that does not carry WC insurance on its salespersons, even if they are independent contractors....and has announced that it will take this sweeping action to enforce the WC requirement within sixty days (i.e. June 15,2004). The Agency says that, for enforcement purposes, it is able to access and compare databases of those brokers carrying workers' compensation insurance against a list of all real estate licensees."

Penalties for not carrying WC ins on covered workers include:
oo A misdemeanor punisable by up to 1 year in jail and up to $10,000 in files.

oo Citations and enforcement issued by the California Labor and Workplace Development Agency.

oo Issuance of a stop order prohibiting further operation of the business or use of "emplyeee labor".

oo Private actions based on other statutes.

In light of these risks, CAR urges all real estate brokers to take immediate action to verify that they have obtained WC insurance for all of their salespersons, even if they are independent contractors.

Regarding your question on the Audit. It is customary for the State Ins Fund to audit new insureds to make sure they are compliant. My accountant sat in on the audit and it was not as painful as we were nail biting about. The auditor needed all payroll records, all EDD quarterly statements for clerical employees, all cancelled checks for commissions and bank statements to cross reference the commissions. The auditor also needed copies of the 1099's which were cross referenced with the cancelled checks. So, bottom line, as long as you maintain good quarterly reports and accurate payroll records for 1099 employees, any infractions they may find could go in your favor for overpaying or against you for correcting the error and, of course, paying the premium shortage.

The premium is based on a percentage of (e.g. .76) of your total payroll amount. Say you paid out 120,000 in commissions in any given quarter, you would multiply that amount by .76 divided by 100 which will give you your premium due of $912.00....yeah it can squeeze you because it comes out of the broker's pocket and you are not allowed to pass on this expense to the agents.

If you need any additional info, please PM me and I will be more than happy to help ease the crunch.

thanks , that was good info

that's not bad to carry worker comp. i thought it was more, it's pricey though

Thanks Calif dreaming, good info, I just PM'ed you.

by the way, can you recommend a good company who carries Workers Comp insurance?

Save yourself a lot of time and contact your favorite independent insurance broker and ask that broker to get you a quote from the State Compensation Insurance Fund. Because you have no previous WC coverage, the "other insurers" will not even underwrite your coverage.

My E & O Ins agent, Cres Ins. Services in San Diego, had a department that got me covered. Their initial contact was O.K., but after receiving my premium, their customer service died on the vine. Their E&O dept is way better than their WC dept. I faxed you all that data, as promised.