LEGISLATIVE AFFAIRS: New Proposal in Albany Seeks to Make Employees of Independent Contractors

Philip Weiden | December 2019

A new proposal, which has gained some traction, is on the legislative agenda for Albany lawmakers in 2020 and beyond. This is the issue of classifying real estate salespersons from independent contractors to employees. The argument for this bill is that industries, such as the ride-sharing and real estate industries, are not paid well enough, and should be receiving the benefits of a full-time employee especially if they are working solely for one company.

Among the rationales for classifying real estate salespersons as independent contractors are that they get to be their “own boss.” They get to set their own schedule and have flexible work hours. The California law that was passed, at the very least, exempted real estate agents from the law, and allowed them to remain independent contractors. Some are suggesting a compromise where you would consider independent contractor a company employee if he or she worked above a certain number of hours.

This however would fundamentally change the working relationship of what it means to be a real estate agent. To date, the targets have been web-based app companies and ride sharing companies like Uber and Lyft. However, with the new law in California and a new court case that was decided, the landscape has changed. The court case in California provided that an independent contractor needs to show they do work for more than one company to be an independent contractor. If, for instance they only work for Uber or Lyft, they should be considered employees, according to the state courts in California.

There are currently other lawsuits in states around the country alleging that companies misclassify “workers” as independent contractors so they do not have to pay benefits and wages as required under state and federal law. The likelihood is this will become a future landmark court case that will ultimately decide this issue. Stay tuned for any future updates on this issue.

The problem with this issue is that it violates freedom of contract, which has governed the country for a long time. What for instance if they come back and say that “unpaid internships” violate wage laws and that they should get paid? This could hamper a young person’s ability to move up the economic ladder.

Philip Weiden
Legislative Affairs columnist Philip Weiden is the Government Affairs Director for the Hudson Gateway Association of Realtors.