Washington Report

Advocacy Updates from Washington D.C.

DOL Issues Final Independent Contractor Rule

On January 6th, the Department of Labor released the final independent contractor rule. The current effective date of the rule is March 8th; however, the incoming Biden Administration has already indicated this regulation may be frozen upon taking office, and thus may not take effect at that time.

For real estate professionals, the rule does not change their classification as independent contractors under the Internal Revenue Code, nor does it preempt the many states laws classifying real estate professionals as independent contractors.

The final rule mirrors the proposed rule with two core factors used in determining whether a worker is economically dependent on someone else’s business (nature and degree of control; worker’s opportunity for profit or loss) and three other guideposts to use in the support of that analysis (amount of skill; degree of permanence; integrated unit of production). The final rule does not include any safe harbors for any specific industry, rather it retains the fact specific analysis for all, with a few industry specific examples.

NAR submitted a comment on the proposed rule in October, largely advocating for minimal disruption to the real estate industry that greatly benefits from the ability to be classified as an independent contractor. Many states and some federal laws have codified the ability of real estate professionals to be classified as independent contractors, but there continues to be ongoing scrutiny and legal challenges to this status. NAR supports DOL’s efforts to provide a clear and consistent standard for evaluating a worker’s status, while preserving existing worker classification authority that allows real estate professionals to be independent contractors.

Read the DOL Press Release on the Final Rule