Independent Contractor Status in Real Estate – 2015 White Paper

Happy Young Woman with Sold For Sale Real Estate Sign and Keys in Front of House.From Realtor.org, the National Association of Realtors published a white paper that discusses the unique challenges of worker classifications and provides an excellent review of decisions.  It states:

“While the issue of worker classification has been challenged in a variety of industries, the real estate industry’s regulatory structure presents a unique framework within which to operate when it comes to worker classification. The hallmark characteristic of an independent contractor relationship is one where the worker is generally free of control. However, state real estate statutes specifically require brokers to exercise supervision over their agents. Since the requirement of a broker to exercise supervision over agents is in direct conflict with one of the basic tenants of an independent contractor relationship, it is difficult for a broker to both comply with labor laws in order to establish an independent contractor relationship, while also fulfilling their supervisory duties under state real estate laws.

Fortunately, both federal and state legislatures have recognized the unique aspects presented by the real estate industry by addressing the independent contractor issue directly through statutory carve outs. Many state workers’ compensation acts specifically exempt real estate agents from the definition of “employee” under the statute. For example, the Alabama Worker’s Compensation Statute states “a licensed real estate agent operating under a licensed broker shall not be considered an employee for the purposes of this chapter.” In Pennsylvania, the workers’ compensation statute does not apply to “any person who is a licensed real estate salesperson or associate real estate broker affiliated with a licensed real estate broker”, and Louisiana’s workers’ compensation statute exempts any real estate broker or salesperson licensed to do business in the state of Louisiana and operating under the auspices of a licensed broker in the state of Louisiana from application of the act. Alabama, Pennsylvania and Louisiana are not alone. There are approximately twenty-nine states that exempt real estate agents from the application of the workers’ compensation statute….”

Read the full white paper at Independent Contractor Status in Real Estate – 2015 White Paper

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