On June 3, 2015, Boston’s Supreme Judicial Court ruled that real estate agents who worked for brokers would still be treated as independent contractors instead of employees.

The case called into question whether real estate agents working for a brokerage firm should be classified as employees or independent contractors. Under the law, agents who are employees would have to be paid salary or hourly wages with benefits. Right now, agents earn their income just from commissions. The court upheld the long-standing tradition of real estate agents being recognized as independent contractors.

If the ruling had gone the other way, Boston real estate firms would be looking at huge back payments to their employees and increased expenditures in the years to come. Many brokerages said the entire structure of the Boston real estate industry would have had to be revamped.

The real estate industry operates differently than many other businesses. It begins when a broker (a real estate agent who has earned an advance real estate license) starts a brokerage firm. Real estate agents can work within this brokerage firm, having the managing broker take fiscal and legal responsibility for those agents. They work independently to help clients purchase and sell houses, and earn a percentage of those sales as commission.

If you want more information about the differences between a broker and a real estate agent, click here.

The nature of the real estate industry means agents work long hours so they can be available for their clients at any time. If the ruling had said agents were employees, real estate agents would have had to adhere to a dress code, as well as work set hours. Many real estate companies worried that this would be a detriment to clients, as their agent wouldn’t be able to be reached whenever they needed them. Plus, if real estate agents had to be paid hourly, brokerages would have likely been forced to pay mass amounts of back pay to their employees.

 The case dates back to 2011, when six individuals who worked for Boston brokerages sued their firms, asking for salaried compensation based on two conflicting Boston laws. One law said an agent should be treated as an employee, another, directly from real estate law, said agents can be contractors or employees.

Real estate agents had mixed feelings on the subject. Some took to Facebook to express their agreement with the ruling saying it made sure there wasn’t a wage-cap for agents, and ensured agents were working hard for the money they earned.

Other agents disagreed with the statement, saying the long hours and managerial work they put in at the brokerage firms should be paid for through salary.

Thankfully, this ruling will continue to allow real estate agents continue to be available at any time, giving great service to their clients.

If you are a real estate agent, or you are working with a real estate agent, look into purchasing a home warranty for your home. A home warranty is like an appliance warranty or home repair insurance. It can save homeowners money on systems and appliances that fail from normal wear and tear. With this home repair insurance,  homeowners pay $60 for the repair or replacement of a failed system or appliance. For more information on home repair insurance (home warranties) go to www.LandmarkHW.com.

https://www.inman.com/2015/06/03/appeals-court-upholds-century-long-real-estate-broker-structure-in-epic-win-for-the-industry-and-consumers/

http://www.natlawreview.com/article/massachusetts-supreme-court-real-estate-brokers-not-covered-2004-independent-contrac

https://www.bostonglobe.com/business/2015/06/03/sjc-says-real-estate-agents-can-treated-independent-contractors/21fnWOAXxsiZCVu8mITQuO/story.html

https://www.bostonglobe.com/business/2015/06/01/lawsuit-challenges-how-real-estate-agents-get-paid/oCHsTZKLWHXgCYnH7f2aGP/story.html#