Starting in July, BICs should be checking with LLR that all their associated licensees have an active license (e.g., renewed their license by June 30 in 2024 or 2025) and check that your independent contractor agreement and compensation agreements are updated and properly documented/executed.

[Consider using a separation agreement for future planning when a licensee moves to another brokerage or quits real estate or retires or becomes unable to practice real estate.]

Failure to properly handle the independent contractor agreement and independent contractor procedures could cost you a lot of money.

SCR independent contractor agreement:
https://screaltors.org/wp-content/uploads/Forms/501.pdf

A recent SCR legal podcast on the recently updated federal independent contractor rules:
https://www.youtube.com/watch?v=drbI3eMDeCk&list=PL1ir0-wRvNGeDYMKI7togM9QC26nMXoDF

NAR Independent Contractor Information:

https://www.nar.realtor/videos/window-to-the-law/independent-contractor-status-update

Online notes on the NAR video:

  • Use an independent contractor agreement: This contract should clearly state that the salesperson is an independent contractor for federal tax purposes and define their status as such. It should also cover the work’s scope, deadlines, and contractual obligations, and confirm that the contractor and client are not in an employer-employee relationship.
  • Pay on commission
  • Provide their own equipment: This includes cars, phones, and computers
  • Cover their own expenses: This includes insurance, gas, phone bills, and client entertainment
  • Avoid mandating things like dress codes, meeting attendance, and desk coverage
  • Avoid calling them employees
  • Let them set their own schedules: This could mean not requiring desk time
  • Have a lawyer draft compensation and separation agreements

This information is only accurate as of 07/08/24. You must contact SCR for updates and changes to this information after 07/08/24 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org or email byron at screaltors.org)

This information is not legal advice. This information is intended only to provide general information and may not be relied upon as specific legal guidance. Legal counsel should always be consulted before acting in reliance on this information.