3/14/2007 Press Release - Ruling Opens Door for Contractor Lawsuits in Real Estate Industry

FOR IMMEDIATE RELEASE
March 14, 2007

Ruling Opens Door for Contractor Lawsuits in Real Estate Industry

Human Resource and Real Estate Expert Offers Tips for Compliance

Encino, CA, March 14, 2007 – West coast real estate brokerages got a directive from the 9th Circuit Court recently. In Swift v. Realty Executives Nevada’s Choice, the 9th Circuit Court of Appeals affirmed that a real estate salesperson – considered an independent contractor - qualified as an employee of a real estate brokerage because it controlled critical aspects of her work. This opened the door for the plaintiff to then bring a sexual harassment lawsuit against the brokerage. Realty Executives Nevada’s Choice has asked the Court for an en banc hearing. If the ruling stands, experts assert the ruling has major implications for brokerages nationwide.

“Brokers must be cognizant of employment laws and regulations. This case dealt specifically with a Title VII Sexual Harassment claim, but the Court found for this purpose that the independent contractor was equivalent to an employee,” states Michael Trust of Michael Trust & Associates. The human resource consultant’s experience as a real estate broker affords him a unique perspective on real estate employment law.

Employment law typically encompasses disability discrimination, potential wage and hour claims, harassment claims, marital, familial, sexual orientation, protected or perceived statuses, potential benefits, Injury & Illness Prevention Plans, and tax withholding amongst other items.

Trust warns that brokers covered by the 9th Circuit ruling (nine western states and two western Trust Territories) may find themselves on the other end of a creative legal argument for back wages, benefits, and harassment. The trend may prove costly, especially to real estate brokers without Employment Practices Liability Insurance – analogous to a real estate E&O policy. Trust urges brokers to consult with experienced human resources professionals, employment counsel or both to help them come into compliance. “Even if this case is overturned, having good policies and procedures in place is never a bad thing. They can be applied to independent contractors without making them employees if done correctly.”

About Michael Trust
Michael Trust helms California-based human resource consulting firm, Michael Trust & Associates and the successful real estate brokerage Michael Trust Realty. With over 15 years of prior corporate human resources management experience in Fortune 500 type organizations, a national senior level human resources certification, and experience teaching at the collegiate level, he brings a broader perspective to his clients. His participation in respected local and national organizations affords him unsurpassed insight into an ever-changing marketplace. This release is not an offer of legal advice.

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Contact:
Dawn S. Smith
Michael Trust & Associates
(404) 460-7852
press@michaeltrustassociates.com
www.michaeltrustassociates.com

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.