Has a Real Estate Broker Made Improper Deductions?

Written by Sattiraju Law Firm on July 12, 2019

Misclassifying employees as independent contractors is a serious problem in New Jersey, and no group is perhaps more affected than real estate agents. Being misclassified carries serious problems for the employee. You might find that your broker is making deductions that are not appropriate if you are an independent contractor.

At Sattiraju Law, we understand the classification laws in New Jersey inside and out. We have brought many successful lawsuits challenging the misclassification of workers in our state, and we are here to help. Contact us today.

Are You an Employee or Independent Contractor?

It can be difficult to determine what your proper classification should be. There is no bright-line test. For example, you might have an independent contractor agreement. But as the National Association of Realtors points out, this contractor does not by itself prove you are an independent contractor.

Instead, New Jersey courts will look at different factors depending on the situation. There may be different tests employed depending on whether the issue is a federal tax issue or a wage dispute involving overtime rights under New Jersey law.

Some key issues involve the following:

  • Whether the worker is free of the realtor’s direction and control. If the worker is an independent contractor, then the realtor should be mostly focused on whether the house sells and not much else.
  • Whether the worker provides services outside the employer’s usual course or places of business. If not, they look like an employee.
  • Whether the worker has an independent business, trade, or occupation. If you do, then you are probably not an employee and should not be treated like one.

If a real estate broker tells an agent when and where to work, and if the broker instructs the agent what to say when showing a home, then they are not treating the worker like an independent contractor. This is also true if the broker prohibits a real estate agent from working with other brokers.

Meet with an experienced attorney to review your case. Only a lawyer can apply the correct law to the facts of your case to determine your proper classification.

Has the Broker Made an Illegal or Unfair Deduction?

The amount of the commission that a real estate agent should receive should be negotiated between the broker and the agent. However, we have seen some brokers make illegal or otherwise improper deductions from commissions, such as:

  • Taxes. As an independent contractor, you pay 100% of your payroll taxes (called FICA), so a broker should not be deducting any withholding taxes unless you are truly an employee.
  • Business expenses. Independent contractors should play for their own business cards, brochures, websites, videos, and insurance. A broker should not deduct from a commission to pay for these.
  • Unemployment insurance. An employer pays for unemployment insurance but there should be no deductions if you are an independent contractor.

Contact Us if You Are a Misclassified Real Estate Agent in New Jersey

You work hard and should receive a full commission as promised. To find out whether you have been misclassified and the types of compensation you can receive, contact Sattiraju Law Firm today for an initial consultation.

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