Massachusetts Superior Court Issues Clarification of Independent Contractor Law as Applied to Real Estate Licensees
There was in a recent ruling by the Superior Court of Suffolk County which dealt with the question of real estate agents and their status as independent contractors. A Notice of Appeal has already been filed by the losing agents and we wanted to make you aware of these issues as an Appeals Court decision could have a direct effect on how the real estate industry does business in Massachusetts.
In a decision that is extremely helpful to the real estate industry, the Suffolk County Superior Court recently confirmed the vitality in Massachusetts of the long-held rule that real estate agents may affiliate with their broker as independent contractors and will not automatically be viewed as employees. Most agents both in Massachusetts and throughout the country have agreed to affiliate as independent contractors, due largely to the commission-based nature of the business, the irregular hours, and the manner in which the business is conducted. While independent contractor status is specifically authorized in Massachusetts’ real estate licensing law, a second statute, the Massachusetts Independent Contractor Statute, could potentially characterize all agents as employees if it were held to apply in the real estate industry.
In the case, Monell v. Boston Pads LLC, a group of former agents agreed to be independent contractors and later alleged that they were misclassified as such and should have been classified as employees. They sought to bring a class action and to obtain treble damages for all class members. After examining the applicable statutes, including the 2010 amendment to the real estate licensing law that the Massachusetts Association of REALTORS® had supported, the Superior Court sided with the brokerage firm and held that the Independent Contractor Statute, which would have classified these agents as employees, was inapplicable. This is a significant victory for the real estate industry, as it lessens the likelihood of additional misclassification claims, and allows real estate licensees to continue to work as independent contractors.
The losing agents have filed a notice of appeal and are expected to seek to have the case heard by the Supreme Judicial Court. A decision is expected in the spring or summer of 2014. The Massachusetts Association of REALTORS® along with the Greater Boston Real Estate Board, will be filing an amicus curiae brief (“friend of the court brief”) in support of the defendant-brokers. The brief will clearly explain why it would be unfair and inconsistent with the legislature’s intent to permit this type of misclassification claim to proceed in the real estate industry, and why it is important for the industry that brokers and agents continue to have the ability to choose whether to affiliate as independent contractors or as employees.