Ruling Opens Door for Contractor Lawsuits in Real Estate Industry

 

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 and 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 and 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 article is not an offer of legal advice.