This week on the GAD Top Three:
- Some big news at the federal level recently with the U.S. Department of Labor release of their final rule on independent contractor status, which the National Association of REALTORS (NAR) is concerned could lead to the misclassification of real estate professionals as employees.
- NAR files two post-trial motions to overturn the Sitzer/Burnett Verdict
- The Village of Kalkaska is discussing a potential short-term rental ordinance.
1. U.S. Department of Labor Issues Final Independent Contractor Rule and Brokerage Best Practices for Preserving Independent Contractor Status
Last week the U.S. Department of Labor issued the final independent contractor rule assessing how workers should be classified under the Fair Labor Standards Act (FLSA) given the department’s concerns with worker misclassification. This final ruling rescinds the 2021 independent contractor rule and applies a multi-factor economic reality test for determining whether workers should be classified as independent contractors or employees. The National Association of REALTORS (NAR) is concerned about the law's unintended consequences and its impacts on real estate professionals. NAR has worked with Congress to introduce H.R. 5419, the Direct Seller and Real Estate Harmonization Act, which is legislation to amend the FLSA to clarify the definition of employee as it relates to direct sellers and real estate agents, and for other purposes. The six factors include:
- opportunity for profit or loss depending on managerial skill;
- investments by the worker and the employer;
- the degree of permanence of the work relationship;
- the nature and degree of control;
- the extent to which the work performed is an integral part of the employer’s business;
- and the skill and initiative.
In response to this release of the U.S. Department of Labor’s final rule, NAR has recently created a Window to the Law video and article providing tips to guide brokerages on worker classifications and best practices on how they can preserve agents' independent contractor status.
2. NAR Files a Formal Challenge to the Sitzer/Burnett Verdict in Post-Trial Motions
If you haven’t heard, on Monday, January 8th, the National Association of REALTORS filed two post-trial motions in a U.S. district court in Kansas City, Missouri. The first asked a federal judge to enter judgment as a matter of law in NAR’s favor in the Sitzer Burnett case, arguing that the jury lacked a “legally sufficient basis” to find for plaintiffs. The second motion filed was the association requesting a new trial if the judge declines to enter judgment as a matter of law. This is the first step in NAR’s formal challenge to the SItzer Burnett verdict.
NAR continues to remind members that the buyer agency remains intact during the appeal process and members can continue to focus on ensuring transparency with clients around compensation. In particular, members should stress the negotiability of their compensation in every single transaction. NAR Chief Legal Officer Katie Johnson urges every member to use buyer representation agreements, which offer a prime opportunity for members to explain their value in the transaction, the services they provide, and how they’ll be paid. Members also can take the time to talk about how local broker marketplaces benefit buyers and sellers.
For more resources and information on how local broker marketplaces support home buyers and sellers everywhere, check out competition.realtor for infographics, articles, and more.
3. Village of Kalkaska Discussing a Potential Short-Term Rental Ordinance
At the December 11th Village of Kalkaska Council Meeting, it was reported that the Village of Kalkaska Development Committee has been discussing a proposed short-term rental ordinance. Village Manager Aaron Popa provided this report and stated that the Housing Development Committee wishes to schedule a public hearing with the full Village of Kalkaska Council to obtain public input on how to move forward. This matter was not discussed at the most recent Village of Kalkaska Council meeting on January 8th and at this point, there does not appear to be a public hearing scheduled on this matter.