Put Your Agents’ Status in Writing

Texas REALTORS® has the following two forms for brokers to document details about their business relationship with associated agents:

Independent Contractor Agreement for Sales Associate (TXR 2301) allows a broker and agent to spell out the details of the agreement when an agent affiliates with a broker as an independent contractor.

Statement of Understanding (TXR 2302) is a one-page form that reconfirms the conditions spelled out in the Independent Contractor Agreement for Sales Associate. Executing this form each year helps brokers and agents ensure that the details spelled out in the Independent Contractor Agreement for Sales Associate have not changed.

New rule provides factors to help make a determination.

The U.S. Department of Labor issued a final rule in January to update the criteria used to assess whether workers should be classified as employees or independent contractors under the Fair Labor Standards Act (FLSA). Employers who wrongly classify workers as independent contractors may be liable for failing to pay overtime or minimum wage, plus liquidated damages and attorneys’ fees. The new rule lists the following factors for consideration:

  • Opportunity for profit or loss depending on managerial skill
  • Investments by the worker and the employer
  • Degree of permanence of the work relationship
  • Nature and degree of control
  • Extent to which the work performed is an integral part of the employer’s business
  • Skill and initiative.

Each case is considered individually based on these and other pertinent details of the work relationship. No single factor or combination of several provides an absolute determination of work classification.

While the rule is unlikely to change the work classification of the many real estate agents who are independent contractors, it’s important for brokers to understand the rule and ensure that workers are operating in the manner for which they are classified.

The National Association of REALTORS® has worked with Congress to introduce H.R. 5419, the Direct Seller and Real Estate Harmonization Act, which is legislation that, among other actions, amends the FLSA to clarify that the definition of employee does not include qualified real estate agents.