NAR Report Summarized:
On October 11, 2022; the Biden Administration’s Department of Labor proposed new rules that might be approved and take effect in 2023 that could re-classify many gig workers and independent contractors as employees under the federal Fair Labor Standards Act.
NAR reports that 87% of the 1.5 million REALTORS® are independent contractors.
NAR continues to promote the ability of REALTORS® to decide if they want to operate as independent contractors as described in the Internal Revenue Code.
https://www.law.cornell.edu/uscode/text/26/3508
The proposed federal rule would look at the "economic realities test" and the "totality of the circumstances" in the work relationship including:
The opportunity to make money or not is dependent on managerial skill.
The investments by both sides in the work relationship.
The permanence of the work relationship.
The nature and degree of control in the work relationship.
How integral the work is to the supervising business.
The skill and initiative involved.
Real estate is a special industry for independent contractors who set their own schedule because the supervisor in most states has license law required supervision duties that arguably are to be uniquely analyzed as part of the "control" in the independent contractor test and viewed through other sections of federal and state law that are uniquely applicable to real estate brokerages.
SCR provides standard forms for the independent contractor agreement and broker policies.
Brokerage and independent contractor attorneys can tailor their written agreements including the independent contractor agreement, the brokerage policies, the compensation agreements and agreements about handling all aspects of a future separation (e.g. compensation, leads, pendings, clients, referral fees, access to files, listings, complete separation).
https://screaltors.org/wp-content/uploads/Forms/501.pdf
Using an independent contractor agreement, allowing associated licensee independent contractors to set their own schedule in accordance with license law, allowing associated licensee independent contractors to exert their knowledge, skill, and managerial abilities to profit, in accordance with license law, allowing associated licensee independent contractors to invest and improve their skill set and equipment, and all these occurring while complying with all applicable laws and the NAR Code of Ethics can help REALTORS® to be successful and decide if they want to be an associated licensee independent contractor.
Some real estate licensees hire licensed or unlicensed assistants or administrative workers. These same issues can apply to these work relationships as well.
Teams of real estate licensees can also see these issues arise in their work relationship.
Comments and questions: SCR Legal 803-772-5206 and INFO
Posted by: Byron King on 10/12/22 (This information is only accurate as of 10/12/22. You must contact SCR for updates and changes to this information after 10/12/22 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.