Page 14

PHOTO: ISTOCK / NICO_BLUE ©2014

top of mind

Independent Contractor Status: Caught in the Crosshairs Lawsuits focus on the conflicts between state labor laws and real estate license laws when assessing the broker-associate relationship. hen Nesto Monell hung his

W

area of law: real estate sales associates

independent contractors. (Regardless

real estate license with Jacob

as independent contractors.

of which path they choose, brokers must

2012, he was required to attend training,

that explicitly provide for real estate

up a conflict with state labor laws, which

share front-desk time with other associ-

agents to be deemed independent

deem supervisory duties to be a factor

ates, fulfill office-hours duty, own a day

contractors despite challenges like these,

in determining whether an independent

planner, obtain a cell phone with a 617

so these cases might be aberrational as

contractor relationship exists.

area code, and adhere to a dress code.

opposed to signifying a trend of things to

As an independent contractor, he

come,” says Lesley Walker, NAR associ-

over your sales associate in accordance

received a Form 1099 instead of a W-2

ate counsel. “Even so, because the inde-

with the real estate license laws and also

from his broker and was paid on a com-

pendent contractor status of associates

maintain the independent contractor

mission basis. But Monell, along with five

is so important to our industry, NAR is

relationship in compliance with the state

colleagues at Jacob Realty and at three

looking at this as a national issue. How

labor laws,” says Walker.

other companies owned by the bro-

these cases are resolved could send a

kers, filed suit in late 2012, claiming the

message to other jurisdictions.”

Realty in the Boston area in

requirements they had to meet and the

A central issue in these cases is the

supervise their associates.) That sets

“It’s difficult to exercise supervision

In its ruling last year in favor of the brokerage, the court said the real estate law prevailed for two reasons:

supervision they received constituted an

conflict between how state employ-

employee-employer relationship.

ment and labor laws treat independent

amended after the independent

b

The real estate statute had been

contractors and what brokers must do to

contractor statute came into effect,

in favor of the brokers last July. But this

comply with their responsibilities under

indicating that the legislature intended

case and two others pending in Califor-

real estate license laws.

the real estate statute to control.

A Massachusetts Superior Court ruled

nia have caught the attention of the real

10

“Many states have adopted statutes

In Monell et al v. Boston Pads, Massa-

estate industry because they involve

chusetts law allows brokers to treat their

what many have assumed to be a settled

sales associates as either employees or

REALTOR® MAY/JUNE 2014

b

The real estate statute is the more specific statute.

Monell and the other plaintiffs are appeal-

REALTORMAG.REALTOR.ORG

RealtorMag May/June