An inconsistency between Massachusetts’ real estate statue and Massachusetts’ independent contract statute prompted plaintiffs to bring an action against the real estate companies they worked for. Plaintiffs argued they were improperly classified as independent contractors paid on a commission only basis, despite their employer exerting the type of direction and control over their activities more commonly associated with an employer-employee relationship. The defendant real estate agency argues that the independent contractor statute is not controlling because the real estate industry is subject to particularized licensing laws.

The Suffolk Superior Court ruled in favor of the defendant real estate agency. However the Supreme Judicial Court will be issuing a decision shortly as to whether Massachusetts’ real estate statute does indeed triumph the Massachusetts’ independent contract statute.

“The real estate statute explicitly provides that an agent may either be an employee or an independent contractor, and, in the same sentence, the law reiterates that agents must remain under the auspices of a broker… In contrast, the independent contractor statute requires that real estate salespersons be “free from [the] control and direction” of their employer-brokers in order for the employer-broker to correctly classify the individual as an independent contractor… This begs the question, how can a real estate salesperson be ‘free from control’ of the broker under the independent contractor statute, where the real estate statute requires that the salesperson ‘be under [the] supervision of [the] broker’?”

The court concluded that a real estate salesperson, acting as an independent contractor, could not possibly satisfy the independent contractor statute and the applicable real estate laws simultaneously. Therefore the independent contractor statute does not control the present matter and therefore a claim based on a violation of the independent contractor statute must fail.

Plaintiff’s attorney is hopeful that the Supreme Judicial Court will overturn the Superior Court’s ruling. The defense believes that a ruling in the plaintiffs favor would require the reclassification of all real estate agents in the commonwealth. Although the plaintiffs counter stating that “just because the defendants violated the independent contractor law doesn’t mean all real estate agencies are doing so.” The forthcoming decision from the SJC is one of the most anticipated cases of the year. If you have any concerns about how the case will effect your employment relationship, please contact Adam Shafran.