Lawsuits Challenge Independent Contractor Status

From the National Association of Realtors blog came the most shared story in 2014 —

Real estate sales associates operating as independent contractors would seem to be a settled area of law, but three lawsuits were filed last year in which associates claimed they were employees and wanted to be compensated as such.

They argued that, based on the kinds of tasks they were required to do and the supervision they were subject to by their brokers, they were hardly working as independent contractors.

Two of the cases are in California and they’re pending. The third is in Massachusetts and late last year the state’s Superior Court ruled in favor of the brokers, saying state law gives the brokers a choice to classify their associates as either employees or independent contractors, and the brokers had properly classified them as the latter. The case is now in appeal, and the Massachusetts and Boston associations of REALTORS® are filing a friend-of-the-court brief in support of the brokers.

“We’re hopeful when considering the appeal that the state Supreme Judicial Court will reaffirm the lower court decision that real estate agents may affiliate with their broker as independent contractors and should not automatically be viewed as employees under Commonwealth law,” says John Dulczewski, executive director of the Greater Boston Association of REALTORS®.

Given the market’s tough conditions this past year or so, some sales associates might be attracted to the income stability that comes with a paycheck. After all, to succeed today you have to deal with inventory shortages, high home prices, tough financing conditions, and stagnant incomes among buyers.

With this as the backdrop, its helpful for brokers to take care in how they structure and maintain the independent contractor relationship they have with their sales associates.

Read the full story at Lawsuits Challenge Independent Contractor Status.

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