On Wednesday, September 17, 2025, the Congressional Committee on Education & Workforce advanced a handful of bills out of committee, sending them to a floor vote in the House of Representatives. One of them—called the Direct Seller and Real Estate Agent Harmonization Act—would amend existing law so that real estate agents are definitively classified as independent contractors.
The one-page bill amends the Fair Labor Standards Act of 1938 (FLSA), which reformed employee protections to establish a minimum wage, overtime pay, etc. Under this amendment, the law’s definition of “employee” specifically does not include “qualified real estate agents” or direct sellers. A majority of agents are considered independent contractors already and agents are classified as such under the Internal Revenue Code (IRC) tax law. This amendment would bring the FLSA in line with that.
The bill was previously introduced in the previous congressional session, when it earned the public support of the National Association of Realtors® (NAR). NAR has maintained its support for the legislation since its reintroduction during this current congressional session.
In a letter signed by NAR President Kevin Sears and sent to the committee in support of the bill (later provided to RISMedia), it was written that “NAR believes that this bill provides greater clarity for how direct sellers and real estate agents should be classified under the FLSA and generally under federal law. Small business owners and independent contractors play a significant role in our economy and workforce. Without this legislation, millions of entrepreneurs risk being misclassified, jeopardizing their ability to work as independent contractors.”
The “added clarity” of agents being considered independent contractors under both tax and labor law “prevent the misclassification of real estate professionals as employees and provide greater predictability,” claimed the NAR letter.
“For decades, independent contractors performing work as direct sellers and real estate agents have enjoyed the tax benefits of being in business for themselves. Yet, as we’ve seen before in this committee, the FLSA has not kept up with this reality,” said committee chair Tim Walberg (R-MI) in prepared remarks during the Wednesday hearing. “In order to ensure that direct sellers and real estate professionals continue to be classified as independent contractors, Congress needs to make (a) simple fix.”
IRS code has long ensured that nearly all real estate agents operate as independent contractors, but over the last two or three years, some in the industry have worried that regulation of independent contractors in other industries (specifically ride share drivers and food delivery service workers) could impact agents.
The bill was voted out of committee with 19 yeas and 16 nays. During the hearing, a handful of Democratic representatives raised concerns about the legislation’s purpose and possible impact.
Ranking Democratic committee member Bobby Scott (D-VA) argued that excluding agents from being considered employees would give brokers more power over agents working with them.
“If real estate agents are categorically excluded from ever being considered employees under the FLSA, the brokers—who already sit in powerful positions—would be able to require agents to surrender all independence by requiring them to report to an office, work set hours and meet pretty much any other worker requirement the broker says,” said Scott.
Scott later entered into the record a letter from the National Employment Lawyers Association (NELA, an association for lawyers who represent workers) that opposed the bill.
NELA’s letter argues that agents being considered independent contractors under tax statutes should not dictate them also being considered such under labor law. The crux of the argument is the claim that many real estate agents work as, in essence, employees and reclassifying would remove legal recourse for them.
In support of these claims, the NELA letter cited a class-action lawsuit filed against Coldwell Banker in 2012 by agents of the brokerage. The plaintiffs claimed that “Coldwell Banker ‘willfully misclassified’ them as independent contractors while exerting significant control over their work, including by requiring them to work at a designated physical location and precluding them from working for other brokerages,” while not receiving traditional benefits of employees.
The lawsuit was settled in 2016 with Coldwell Banker paying $4.5 million.
“Many direct sellers and real estate salespeople operate under form independent contractor agreements while actually working under conditions that reflect employee status,” the NELA letter claimed. “In litigation across these sectors, workers have alleged detailed control over hours, methods, locations, marketing and exclusivity—classic indicators of employee status under the FLSA’s economic realities test—even where they are paid on commission.”
The letter continued, arguing that classifying agents as independent contractors under the FLSA would “tell courts to disregard those facts.”
John Mannion (D-NY) argued that the bill would “chip away” at labor laws and worker protections.
Agents are “professionals who help facilitate homeownership and job creation in our communities,” Mannion said. “Many of them value the flexibility that comes with being an independent contractor, and under both the IRC and current labor standards, that is almost always how they are treated. This bill would not meaningfully change the day-to-day reality for these workers. What it would do is carve out entire occupations from the FLSA categorically and permanently.”
Lucy McBath (D-GA) argued that “this bill is searching for a problem that just simply doesn’t exist. There is no threat to the real estate business model by the FLSA. This is the first time this issue has ever been brought before this committee, and I don’t believe real estate agents or direct sellers have ever been discussed when we’ve been talking about worker classification.”
McBath, in turn, alleged that the bill is intended to “scare” agents and direct sellers into “signing rights away under the guise of protection (for their jobs).”
Suzanne Bonamici (D-OR) later echoed McBath that the issue of agent and direct seller classification has not previously come before the committee, and questioned the relevance of the bill:
“We haven’t had a hearing. We haven’t established there’s a problem here to solve,” she said.
