Many real estate agencies and brokers mistakenly refer to employees as independent contractors. Depending on how much a real estate agency influences your work, you may be acting as an employee from a legal perspective. If this is the case, you will not get the benefits to which you are entitled, such as: Legally, the main difference between employees and independent contractors is the level of control that the company has over the individual employee. If the company has significant control, that person is likely to be considered an employee. But if the company has very little control and individuals in their role have the freedom to do their jobs at will, they are more likely to be classified as independent contractors. In this case, the agents were treated as employees, although the company referred to them as independent contractors. Eventually, the case opted for $4.5 million in favor of the real estate agent applicant category. Some definitions of the term state that the person or entity hiring the contractor is not responsible for the contractor`s actions, but most state real estate laws make the broker liable to an agent responsible for his or her actions. In Bararsani v. Coldwell Banker, there was a class action lawsuit accusing Coldwell Banker of classifying its real estate agents as independent contractors while treating them as employees. It has been proven that the company has significant control over the work of its real estate agents, including determining where and when agents would work.

The settlement of the case was approximately $4.5 million, although much of the settlement funds were used for legal fees. The amount of each real estate agent involved in the class action was minimal. Working as an employee includes certain benefits. As a rule, you have fixed working hours. Human resources calculates your federal, state, and local tax deductions for you. Plus, you`ll earn a predictable and stable salary, unlike independent contractors whose income can fluctuate. For legal reasons, the main difference between an employee and an independent contractor is often determined by the degree of control a company has over the employee. The more control a company has over the employee, the more likely it is that the employee will be considered an employee. One of the reasons why brokers don`t hesitate to hire new inexperienced agents is that there really aren`t any big investments. State laws for the classification of employees and real estate licenses vary in terms of determining the appropriate classification of real estate licensees.

Some states explicitly recognize real estate permit holders as independent contractors when certain conditions are met, and other states remain silent about real estate permit holders, requiring courts to apply the applicable test to determine the appropriate classification. For this reason, it is crucial for real estate professionals to know the laws relating to the classification of workers in their states. Under many state and federal laws, the “mandatory” determination of certain actions can be seen as an indication of employer-like control over the employee. One of the characteristics of an independent contractor relationship is that the independent contractor has the ability to direct and control where, when and how they perform their work. Independent contractors, on the other hand, did not retain anything from their offices. They receive the gross amount of commissions earned and are responsible for paying their own tax obligations. Much less paperwork is required for the office manager. An independent real estate contractor works as an agent and retains exclusive control of their business functions such as work schedules and accounting. The “contractor” part of the term indicates that some type of written agreement or contract has been performed with the company or the person it hires to perform a task, work or function, usually its broker. Are you an independent contractor or an employee? Sometimes it`s not always an easy question for real estate agents. Special treatment for real estate agents was introduced by the IRS to ensure the liability assumed by brokers if brokers otherwise complied with these rules.

.