At least one court and now the California Labor Commissioner thinks that agents are owed a minimum wage despite the traditional practice of paying agents as outside sales people on a commission only basis.
California's Labor commissioner recently has filed a lawsuit seeing back wages, unpaid overtime and damages and penalties exceeding $17,000,000 against ZipRealty. The suit seeks enforcement of California's minimum wage law. ZipRealty has denied the minimum wage claims arguing that minimum wages and overtime were not owed, due to the fact that the people involved were not employees, but outside salespeople.
To be fair, I don't know enough of the facts to give a clear analysis of, not only what has been alleged, but what the key legal issues are. However, at first glance from the news articles, the actions taken by the labor commissioner and a recent September court ruling in a Kern County Superior Court has the potential of putting the entire real estate industry on its ear.
Before all you brokers out there start running in a panic though, you should double check with you own legal counsel in your own state to make sure that your payment practices are in accordance with your own state law and you are not trying to cut corners with your agents. Remember, laws do vary from state to state. Additionally, upon further review, I may discover that the allegations of the insurance commissioner are limited to the particular facts and acts of ZipRealty and not a wholesale attempt to change a common payment practice within our industry.
At this point, this is a story that seems worth following and which I will be reporting on in coming weeks and months.
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