Independent Contractor New Ruling Equivalent to Being an Employee

Given the recent 9th Circuit ruling in Swift v. Realty Executives Nevada’s Choice, Brokers must now be more cognizant of employment laws and regulations. While this case dealt specifically with a Title VII Sexual Harassment claim, the Court found for this purpose that the independent contractor was in fact the equivalent to an employee. Employees are subject to all employment laws. In California, such laws would include disability discrimination, potential wage and hour claims, harassment claims, marital, familial, sexual orientation, and other "protected statuses or 'perceived statuses'", Injury and Illness Prevention Plans (because CA law already requires brokers to treat salespeople as employees for the purpose of workers' compensation, this may be done already), potential benefits, tax withholding, etc. Brokers covered by this ruling (the jurisdiction of the 9th Circuit - generally, 9 western states and two western Trust Territories) may find themselves on the other end of a creative legal argument for back wages, benefits, harassment, etc. by attorneys who use this case to argue other types of issues are analogous to this issue and thus that in those cases, these salespeople and/or broker-associates are really employees. It can become quite costly, especially because many real estate brokers probably do not have Employment Practices Liability Insurance - the equivalent to a real estate E&O policy. Thus, brokers should consult with experienced human resources professionals, if they have not already done so, to help them come into compliance. Even if this case is overturned (there is a re-hearing pending), having good policies and procedures in place is never a bad thing - polices and procedures can be applied to independent contractors without making them employees if done correctly.

Michael Trust is a California based real estate broker, Realtor®, and owner of Michael Trust Realty, www.MichaelTrustRealty.com in addition to being the President of Michael Trust & Associates, a Human Resources Consulting Firm, www.MichaelTrustAssociates.com . Mr. Trust can be reached at info@MichaelTrustRealty.com or MichaelTrust@MichaelTrustAssociates.com.