NAR provided a comment on the U.S. Department of Labor's (DOL) proposed rule interpreting how a worker is classified under the Fair Labor Standards Act (FLSA). The comment advocates for the final rule to incorporate the Internal Revenue Code (IRC) provision classifying real estate professionals as independent contractors (26 U.S.C. §3508), as well as suggestions to the proposed economic realities test that would better recognize the real estate agent-broker relationship and state real estate laws and regulations. NAR also submitted a joint comment letter with the Direct Sellers Association (DSA) advocating for mirroring of the IRC provision in the final rule.
NAR supports the protection of, and efforts to further secure, the right of real estate salespeople to work as independent contractors and for brokers to choose to classify real estate salespeople as independent contractors. The proposed rule interpreting the FLSA does not impact the classification of real estate professionals as independent contractors under the IRC, but it could compel misclassification litigation or encourage states to adopt similar measures. DOL will review the comments on the proposed rule and then propose a final rule for adoption.
Read more on the proposed rule.
See more information on NAR’s advocacy to protect independent contractors.