The Federal United States Department of Labor (DOL) recently issued its Final Rule on the classification of workers as Employees or Independent Contractors, currently scheduled to become effective on March 11, 2024. While both C.A.R. and NAR submitted comment letters opposing any Final Rule that would adversely affect the ability of real estate licensees to work as independent contractors, the new Final Rule does potentially adversely affect California real estate licensees. Existing California law including C.A.R. supported AB 5 (Gonzalez) enacted in 2019 in conjunction with other laws strongly protect the ability of California real estate licensees to work as independent contractors and recognizes the history and unique nature of the real estate brokerage industry. Legal review and analysis of the Final Rule reveals potential issues that may conflict with California’s legal protections and may create some new legal challenges for the ability of agents to work as independent contractors if they so choose.
Recognizing the potential ramifications, C.A.R. is collaborating with NAR to seek clarification from the DOL. Together, we are urging the DOL to consider delaying the implementation of the Final Rule to allow for a comprehensive understanding of how it aligns with the unique provisions of California’s statutes.
In addition to seeking clarification, NAR and C.A.R. are actively supporting H.R. 5419, the Direct Seller and Real Estate Agent Harmonization Act. This legislation aims to ensure that real estate agents maintain the freedom to choose the classification that best suits their business model. By supporting this bill, the real estate industry is advocating for the preservation of agents’ freedom to choose to operate as independent contractors or employees.
The collaboration between C.A.R., NAR, and legislative efforts such as H.R. 5419 reflects the industry’s commitment to safeguarding the flexibility and choices of real estate agents amidst evolving labor regulations.