A former West Capital Lending LO is challenging the brokerage's independent-contractor model, alleging the company imposed extensive controls on originators while requiring them to pay hundreds of dollars in monthly fees and other business expenses.
Paul Ko, who says he worked at West Capital from December 2025 through June 9, 2026, alleges the Irvine, California-based brokerage misclassified MLOs as independent contractors, failed to pay overtime, and required them to cover expenses that should have been reimbursed.
His complaint, brought under California's Private Attorneys General Act (PAGA), describes a working arrangement that he argues gave West Capital the control of an employer without the corresponding wage-and-hour obligations.
A separate proposed class-action complaint by former employee Heather Tibiatowski raises additional wage-and-hour allegations involving hourly and nonexempt workers.
Both complaints are dated October, adding to West Capital's legal troubles.
NMP sought comment from West Capital on the allegations but had not received a response by publication.
Hundreds In Monthly Fees
According to Ko's complaint, West Capital charged LOs approximately $237 a month in technology fees and required them to pay $120 each time they submitted a customer credit application.
Ko also alleges he was required to purchase access to Bonzo, a customer relationship management platform, for $150 a month to access West Capital's leads.
Together, the two recurring charges would total approximately $387 a month, or $4,644 annually, before credit application charges and other business expenses.
The complaint also identifies costs for internet service, cellphones, computers, monitors, headsets, printers, office furniture, licensing, parking, insurance, and travel that Ko says LOs were expected to cover.
Ko argues those expenses should have been reimbursed under California law because the LOs were employees in practice, despite being classified as independent contractors.
The allegations touch on a familiar calculation for producing LOs: what remains of a commission after the costs of generating, processing, and closing a loan.
Brokerage compensation structures vary, and independent contractors commonly bear some of their own business expenses. The issue raised by Ko's complaint is whether West Capital's LOs were properly classified and whether the company was legally obligated to reimburse the expenses he describes.
How Independent Were The Contractors?
The complaint also challenges the restrictions West Capital allegedly placed on its LOs.
Ko claims the company's LO agreements required full-time service, restricted outside business activities, and prohibited originators from working with competitors.
He alleges LOs were required to place their licenses exclusively with West Capital, follow company policies, attend mandatory training and staff meetings, and use company-approved systems and marketing materials.
The complaint also describes a requirement to enter loans into LendingPad within 24 hours, with potential commission penalties for missing the deadline.
Ko further alleges West Capital monitored loan pipelines and sales activity while retaining authority to supervise, discipline, and terminate originators.
He argues that these requirements gave the brokerage a degree of control inconsistent with its treatment of loan officers as independent contractors.
The complaint challenges whether West Capital's agreements satisfy California's statutory provisions governing the classification of certain licensed real estate professionals. In particular, Ko alleges the agreements lack required language addressing independent-contractor treatment for state tax purposes.
He also argues that the company's restrictions and supervisory authority support employee classification under California law.
Those are legal arguments advanced by the plaintiff, not court findings. The classification of MLOs depends on the applicable legal standards and the actual terms and circumstances of their work.
Ko additionally alleges he worked approximately three to five hours of overtime each week without receiving overtime comp.
He claims West Capital failed to provide accurate wage statements and reimburse necessary business expenses.
The PAGA action seeks civil penalties for alleged California Labor Code violations on behalf of Ko and other allegedly affected employees.
Separate Complaint Raises Hourly Wage Claims
West Capital also faces a proposed class-action complaint from Heather Tibiatowski, who says she worked for the brokerage as an hourly, nonexempt employee from approximately January through September 2026.
Her complaint alleges failures to pay minimum and overtime wages, provide legally required meal and rest periods, issue accurate wage statements, pay final wages on time, and reimburse employment-related expenses.
Tibiatowski seeks to represent a proposed class of hourly and nonexempt employees that she estimates includes more than 40 workers.
That figure is the plaintiff's estimate and does not represent a court-certified class.
The two complaints concern different employment arrangements. Ko challenges the classification and treatment of mortgage loan originators, while Tibiatowski's allegations concern employees classified as hourly and nonexempt.
Neither complaint establishes that West Capital violated California employment law.
Employment Claims Add To Legal Disputes
Ko's allegations echo claims raised in loanDepot's lawsuit against West Capital, which accused the brokerage of improperly classifying LOs as independent contractors to gain a competitive advantage. West Capital has denied those allegations.
Ko's complaint approaches the issue from the originator's perspective, alleging employer-like controls, unreimbursed expenses, and unpaid wages. The cases involve separate claims, and neither establishes wrongdoing.
The employment complaints add to West Capital's broader legal disputes. As NMP reported Nov. 3, West Capital voluntarily dismissed its federal compensation lawsuit against loanDepot on Oct. 20 after a judge found it had not sufficiently established standing. The dismissal was without prejudice and did not resolve the underlying allegations.
West Capital is not alone in facing questions about LO classification. NEXA Lending has also faced a former originator's misclassification and unpaid-wage claims, previously examined in NMP's coverage of loan officer compensation practices.
What It Means
For brokerage owners, the Ko complaint raises questions about how independent-contractor agreements are structured and implemented, particularly when companies require originators to use designated systems, attend training, follow business restrictions, and pay recurring fees.
Such requirements are not necessarily unlawful. Their significance depends on the applicable classification rules and the overall working relationship.
For LOs, the financial considerations are more immediate. Commission splits tell only part of the story when an arrangement also includes monthly platform charges, lead-access fees, and per-application costs.
Ko's allegations put those expenses alongside the degree of independence originators actually have in running their businesses.
The legal claims remain unresolved. But the underlying business question is relevant well beyond West Capital: how much control can a brokerage exercise over an independent originator, and who is responsible for the costs of doing the job?
