Independent work plays a significant role in the global economy, especially in the real estate industry in the United States. Protecting the ability of real estate professionals to be classified as independent contractors remains a priority for the National Association of Realtors® (NAR), given that 89% of real estate agents are currently classified as independent contractors. Many real estate professionals choose to be classified as independent contractors because it provides them with greater autonomy, flexibility and the ability to serve the needs of consumers and clients in unconventional ways.
Under the Internal Revenue Code, real estate agents are treated as nonemployees and as independent contractors. NAR believes that under the Fair Labor Standards Act (FLSA), real estate agents should also be treated as independent contractors consistent with tax law. NAR, through its advocacy, continues to prioritize independent contractor matters by working to help advance H.R. 3495, the Direct Seller and Real Estate Agent Harmonization Act. This bipartisan legislation will ensure that, under the FLSA, there is greater clarity, predictability and consistency in how real estate agents are classified for work purposes.
The federal clarity will also provide states with greater guidance as well.
NAR believes that federal tax and labor laws are vitally important and should function in a manner intended to provide the greatest protection, while also taking into consideration the various nuances that are inherent and relevant across industries. For example, it is imperative for the federal government to understand that real estate agents and brokers are licensed by state real estate commissions.
Additionally, most states require that real estate agents be affiliated with only one brokerage at a time to practice real estate. This is primarily for consumer protection reasons, greater clarity as well as transparency for consumers and the public.
Passage of this legislation will help ensure that all real estate professionals understand their rights and responsibilities under federal law. Harmonization and this change in the law will help ensure greater compliance, helping to mitigate and hopefully prevent unnecessary litigation related to worker classification matters.
Real estate professionals work to help families achieve the dream of homeownership and to assist clients and customers with all aspects of real estate. Providing real estate professionals with the greatest clarity related to their worker classification status under both federal labor and tax law will help ensure that real estate professionals are able to serve the needs of their clients optimally.
NAR fully supports the ability of agents to be classified as independent contractors, and to be empowered to be entrepreneurial and innovative in working to advance homeownership for all. We will continue advocating for the bill as part of our ongoing commitment to protect the independent contractor model and preserve the flexibility that makes real estate a unique and attractive career path.
For more information, visit https://www.nar.realtor/.
