Responsibility for one`s own work plans, business functions, accounting systems and other activities in the course of business are the characteristics of an independent contractor. In this case, there should be a written contract or agreement between the contractor and the company. Employers have certain obligations to their employees under U.S. labor laws. Employers must comply with minimum wage, overtime, hours of work and record keeping standards. In many states, workers` compensation insurance may also be required – depending on the type of occupation and the state of health claimed (as there are many exclusions). Since you are not an employee of your broker, your broker is not allowed to tell you what hours to work. You determine what your work plan looks like. Your broker is also not allowed to set a workplace. While it`s often conducive to the company doing a lot of office tasks when you and a customer decide to meet at a Starbucks, your referral broker can`t tell you not to, and if you decide you`d rather spend the morning doing online marketing at home, the broker has no say. It`s important to remember that even if a broker can`t tell you when or where to work, if they don`t like the way you do business, they can release your license, also known as layoffs.

So if you prefer to work late at night and on the go, but the broker you want to work with firmly believes in the virtue of working in the office, right from dawn, then you may not be a good match. Most brokers accept different work styles as long as they trade while maintaining integrity. State licenses view the relationship between the seller and the broker more as a traditional relationship between the employee and the employer. There are many other professions in which one person is an independent contractor for another person or business, but in these contractual agreements it is common for the independent contractor to assume any responsibility for his or her own actions. In the real estate industry, it is assumed that a broker is responsible for the salespeople he hires and acts as a superior. A good agreement will make it clear that just as the seller cannot accept offers with him when he leaves, he will also carefully distinguish the marketing materials to which he is entitled and those to which he is not entitled. If you pay a professional photographer to take pictures of a property and leave the agency, but the agency wants to continue using the photos, you should be able to get a refund for those photos. The IRS requires several things from employers that are not required of people who hire an independent contractor. An employer must withhold taxes on what is paid to its employees, and it must also contribute to social security taxes.

In many cases, an employer is also required to provide health insurance to employees. Since sellers are independent contractors and not employees, they don`t affect any of these things. And while it may seem great that no taxes are deducted from your salary, it only means that paying your taxes is your sole responsibility, which is the subject of a future lesson. Be aware of other state laws that could base the status of an independent contractor on customary law for the purposes of unemployment and workers` compensation. In these states, the broker must meet the most restrictive requirements based on what they are. The fact that real estate agents are accountable to brokers can muddy the waters compared to other industries where the relationship between independent contractors is clearer. Real estate agents have more autonomy than an employee, but the necessary supervision of a broker is a unique factor. The independent entrepreneur relationship between brokers and their sellers has a long tradition in the real estate industry. NAR supports protection and efforts to further guarantee the right of brokers to decide whether to classify their property sellers as employees or as independent contractors. To ensure the protection of this practice, NAR encourages states to review their existing labor and employment laws as well as their real estate laws and to determine whether these laws adequately guarantee the ability of brokers to classify real estate agents as independent contractors. In some States, it may be appropriate to require legislators to directly and unambiguously design the treatment of sellers of real estate as independent contractors.

This will consolidate the status of real estate sellers as independent contractors and avoid future litigation that challenges this practice. As mentioned earlier, many states, as well as the federal government, already recognize real estate sellers as non-employees, but given recent litigation on the issue, NAR and its members are taking proactive steps to better clarify a real estate agent`s ability to classify real estate sellers as independent contractors. More recently, the passage of the final regulations of the Affordable Care Act (”ACA”) showed that the federal government has recognized the need for different treatment of the real estate industry. The ACA requires large employers (defined in the CBA as those with fifty or more employees) to provide their full-time employees with affordable health insurance of minimal value. This requirement is called ”Shared Responsibility to Employers.” However, the ACA recognizes that real estate agents who are recognized as ”qualified real estate agents” and therefore as statutory non-employees under the IRS Code will also be non-employees in the sense of ”Shared Responsibility to Employers.” Once again, the federal government has recognized the unique independent contractor relationship between sellers and real estate brokers. In one case in Massachusetts, Monell et al. v. Boston Pads, the plaintiffs claimed that their former broker falsely classified them as independent contractors rather than employees, in violation of the Massachusetts Independent Contractor Statute. The plaintiffs claimed, among other things, that the defendants required them to own daily planners, pay office fees each month, have cell phones with an area code of ”617”, in some cases work desk hours, and be subject to disciplinary action if productivity targets were not met. The court dismissed the plaintiffs` request for a summary decision, arguing that the defendants could not prove that the plaintiffs were independent contractors under the Massachusetts Independent Contractors Act. .