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