Typically, real estate agents are considered independent contractors providing the following:
- They control their own work schedules and are not required to have set office hours.
- The agent is responsible for paying their own taxes, etc. on commissions received for sales.
- They are not “real estate assistants” or “agents in training” with specific required office hours
- Each agent is a licensed real estate sales person
- They have a contractual agreement with a broker stating they are to be treated as an independent sales person for all tax purposes
- They do not receive a wage, either hourly, or based upon the hours they work
While real estate agents are considered independent contractors and not employees, if they meet the above criteria, this does not exempt the broker over them from responsibility for the real estate agents behavior in business transactions. It simply exempts the broker from the responsibility of withholding taxes, and the paperwork associated with the tax withholdings, thus, the ruling by the IRS declaring real estate agents as “statutory nonemployees.”
Providing a real estate agent does not break any real estate laws, there may be a fine line as to what a broker is allowed to require of a real estate agent as far as floor duty, etc. which could be interpreted as the real estate agent being an employee and not an independent contractor. This is true regardless of how long the real estate agent works with the broker. In other words, if a real estate agent is working as an independent contractor, but is required to report to work daily in addition to being supervised as to the type of work duties assigned to them, they most likely will not be considered independent contractors by the IRS.
Robert R. Robles Employee Law Expert
If you have questions concerning real estate agents working as independent contractors or employees, contact attorney Robert R. Robles in Oklahoma City.