NAR Backs Contractor Classification Changes
A proposed federal rule could reshape how independent contractors are classified under labor law, a change real estate leaders say would provide more clarity and consistency for brokers and agents.
WASHINGTON — The National Association of Realtors® is backing a proposed U.S. Department of Labor rule that could reshape how independent contractors are classified under federal labor law, a move the organization says would bring greater clarity and consistency to the real estate industry.
The proposal would replace the 2024 worker-classification framework with a revised “economic reality” test that places greater emphasis on two core factors: the degree of control workers have over their work and their opportunity for profit or loss.
“NAR fully supports the ability of agents to be classified as independent contractors, and to be empowered to be entrepreneurial and innovative in working to advance homeownership for all,” Shannon McGahn, NAR’s executive vice president and chief advocacy officer, said. “As the rulemaking process continues, NAR plans to stay engaged on behalf of our members with policymakers and keep the membership informed of any changes.”
The Department of Labor published the proposed rule in the Federal Register on Feb. 27 and accepted public comments through April 28. The agency is now reviewing those comments as it drafts a final version of the rule.
Until a final rule is published, the current regulatory picture remains in transition. While the 2024 rule technically remains in effect, the Wage and Hour Division has indicated its enforcement approach will continue to follow temporary economic realities guidance issued in prior field assistance bulletins.
NAR said a more predictable independent contractor standard would reduce uncertainty for brokers and agents navigating changing federal labor interpretations. More details are available from the National Association of Realtors.
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