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Independent contractor or employee? Agent status called into question via lawsuits

The age-old debate as to whether a real estate agent is an employee or not has been reignited with a new round of lawsuits. What does the future hold?

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Independent Contractor? Employee? It’s a slippery slope for brokers across the United States as more and more questions arise about the appropriate status for real estate salespersons.

It’s a real pickle. Brokers are required to supervise their associates. Adequate supervision can only happen if agents attend trainings, learn policies and procedures associated with risk management, contracts, and closings. If agents are to be successful, earn for themselves and for the brokerage, and not act as a liability, then it would seem to reason that there must be certain requirements that brokerages can place on their agents.

Current Cases Question Agent Status

Yet, the independent contractor status of real estate agents has been “caught in the crosshairs”, according to the National Association of Realtors®.

Recently, several lawsuits have arisen surrounding this very issue. Cruz v. Redfin Corp. in Alameda County Superior Court and Bararsani v. Coldwell Banker Residential Brokerage in Los Angeles Superior Court are two California cases that have not yet gone to trial. In both of these cases, accusations have been made that certain independent contractors were, in fact, employees and should have been compensated as such.

Realty Times reports that “according to federal law (26 U.S.C. §3508 (b)), for federal tax purposes, real estate agents will not be treated as employees if a 3-part test is met: (1) The agent must be licensed, (2) Substantially all payment is made on the basis of sales or output, but not on hours worked, and (3) There must be a written contract between agent and company providing that, for federal tax purposes, the agent will not be treated as an employee.”

Yet, the Internal Revenue Service has a different evaluation system; it’s a 20-factor test (not a 3-part test) that determines whether the status of an individual worker is that of employee or independent contractor.

The Future for Real Estate Agents

The ramifications of altering the status of real estate agents on a national level could be vast. According to Lesley Walker, associate counsel at the National Association of Realtors®, “Having an employer-employee relationship for a broker could be more expensive, more burdensome, and more time-consuming.”

If these lawsuits determine that real estate salespersons are to be employees and not independent contractors, this could have devastating consequences on the real estate industry. Brokers could owe hundreds of thousands of dollars in back pay, income, and payroll taxes, which would bankrupt even the most successful of brokerages.

On a personal level, our brokerage offers all sorts of ongoing trainings. Many are recorded and can be watched on the agent’s own time. Others are live. While the agent is not required to attend the live trainings, there is a direct correlation between an agent’s income and his or her participation in professional development activities.

If you cannot require that agents attend training, how can you protect your license from loose cannons or rogue agents? Believe it or not, you may not even be able to terminate your independent contractors, as the 20-factor IRS test states that “the right to discharge a worker is a factor indicating that the worker is an employee.”

Real estate brokers are in quite a bind. You’re damned if you do, and you’re damned if you don’t. It will be interesting to see how this will play out in the industry.

Melissa is an in-demand business success speaker and author, as well as a real estate broker with thousands of short sale transactions under her belt. She leverages her experience as a short sale insider to motivate thousands of business professionals to plan their careers better, execute more effectively on their plan, and earn more because of it.

Professionalism

Bill Gates’ big regret of a simple command haunts him, what haunts you?

(EDITORIAL) If BIll Gates is still living with a big regret, it’s time to ponder your own, your own humanity, and consider moving past it in a healthy way.

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It has come to light that Microsoft founder Bill Gates regrets some of the original design decisions of the PC. Namely, the CTRL+ALT+DEL command that allows you to log in to the computer, due to its lack of simplicity when trying to access a key part of a computer’s operating system.

I know Mr. Gates probably has other regrets when looking at the span of his more than thirty years involvement with being associated with one of the most profitable companies in the world. I am assuming that you also have some regrets you have also in regard to your own business and/or career.

We all do.

According to psychologists, regret occurs when an something perceived as an error is made that has some personal accountability tied to it. If you’ve ever been a part of a business team, supervising employees, or been the boss, you’ve had a wealth of personal accountability. And, since you’re human, you’ve definitely made some mistakes.

One of my former bosses told me after a long day, in which I made some mistakes: You did the best you could have with the information you had. More than likely, if you’re agonizing about that mistaken car reservation or wrong decimal point, you made a normal human error. Even if it isn’t a small day to day thing, but perhaps a big issue with some big consequences, you can move on from that. It will be okay.

A great way to move on from a failure or mistake in business is to use the situation as a lesson for the future. Chances are, if you’re a team leader who messed up a relationship with an agent, you will have more agents in the future to avoid that error with.

Learning from your mistakes, and using your errors as fuel to increase your motivation for the next project, is a great way to deal with regrets healthily. If you don’t process your regrets, you can deal with a wealth of mental and physical health problems like chronic stress, depression, and damage to the systems that regulate your hormones.

You will have mistakes, but those mistakes have gotten you to this point in your life. It’s impossible to guess how your life would change if you were able to go back and fix that one thing that feels like a turning point in your business life. Living in spite of regrets is one of the hardest challenges in life to face, but just like Gates, you will accept the past and move on.

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Professionalism

Recognize and use free time at work like the gift it is

(PRODUCTIVITY) Free time during your workday can lead to furthering your mind and productivity.

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Clocked in but clocked out

We’ve all had those slow days at work where we’re looking for ways to kill the time until the clock strikes five.

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While it can be tempting to use this time to text or mess around on the Internet, there are much better ways to use that free time that will make your future so much easier.

Cleanliness is next to godliness

First off, tidy up your workspace. Papers and items have a way of accumulating and may be distracting you even if you don’t realize it. By organizing your stuff and throwing away what you don’t need, you’re able to breathe and focus within your workspace.

It also does wonders for your work brain to clear up your email inbox.

Once that’s all done, plan out the rest of your work week. Make a list of the major goals you’d like to accomplish and then a sub-list of how you’ll knock those goals out. Update your calendar and make sure everything is on track.

Social media, networking, and research

It’s also beneficial to use this downtime to further yourself and your organization. Three ways you can do this is through: social media, networking, and research.

If you have access, take some time to look through your company’s social media and see what can be done to enhance it. Either throw up some posts yourself or pitch ideas to the social media manager.

Networking can be done in this small amount of time by sending out “catch up” emails to old colleagues, “welcome emails” to new clients or introduction emails to LinkedIn contacts.

Send them a “how’s it going?,” tell them what’s new with you, and see what they have going on. You never know where networking can lead so it’s always good to stay in touch.

With research, see what the latest trends are in your field and study up on them. This may give you new ways to look at projects and tasks at hand. And, it’s always beneficial to have continued learning.

Get Smart(er)

While on the subject of continued learning, take this time to mess around with something you may not feel completely knowledgeable of. Maybe dig around RPR data, perhaps practice using different computer programs it is never a bad a idea to nourish your brain.

Having free time during the workday is something of a gift. If you can help it, try not to waste it.

#FreeTimeNotWasteTime

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Professionalism

Working Woman’s Wife: on-demand assistants for busy female brokers and agents

Austin startup, Working Woman’s Wife, offers on-demand help for ambitious female executives juggling work and home life.

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Over the past half century, women have made enormous strides into the workplace, including previously male-dominated professions. More than ever, women are serving as executives for major organizations, starting their own businesses, and finding success in the world of real estate.

Unfortunately, women’s success in the working world has not been counterbalanced by a reduction in their responsibilities at home. Statistics released by the U.S. Department of Labor last year reveal that women are still doing the vast majority of housework, including childcare, cooking, cleaning, laundry, and shopping for household amenities.

On an average day, half of all women are completing chores and errands, while only 19 percent of men are contributing to running the household.

Even when men do pitch in, they tend to spend less hours on housework, while women often cut into their work time or overbook and overstress themselves to manage both their careers and their households.

Helping ambitious women every day

An Austin-based startup wants to help ambitious women who “have long been without the advantages wives have provided to men.” The Working Woman’s Wife is an all-around personal assistance and concierge service fulfilling many of the housewifely functions that have long given men a leg-up in the business world.

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According to the Working Woman’s Wife, women complete an average of 18 hours per week of unpleasant and unpaid work, which means they have less time to advance their careers or spend quality time with their families.

When you hire a “wife,” she will complete many of these tasks for you, including office task such as emails and data entry, organization of your personal spaces or office, pet care, party planning and cleanup, cooking, laundry, running errands, personal shopping, and chauffeuring. They can even hang out at your place until the repairman shows up, so you don’t have to waste half a day of work taking care of a household problem.

How pricing for a “wife” works

Wives are available by purchasing packages of hours in increments of 30, 60, 80, or 100 hours per month, starting at $900 per month. Currently the Working Woman’s Wife serves the Austin, Texas area, but they are hoping to open chapters in Seattle, San Francisco, Dallas, Boulder, and the Silicon Valley.

Busy women brokers, real estate agents, and executives could obviously benefit from having someone take care of all of the “little things” that so often burden women who could be making more money, advancing their careers, and relaxing, if they had the time.

However, I can’t help but wonder who will be helping your “wife” run her own household while she is busily tending to yours. It’s great to see women wanting to help out other women, but maybe it would be better if men would step up to the plate. In lieu of $900 per month, perhaps you can convince your hubbie to pick up some of the slack instead.

#WorkingWomansWife

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