June 3:- Can a real estate brokerage classify a salesperson as an independent contractor without breaking the law?
A review of the independent contractor statute (Chapter 149, Section 148B) would suggest not. According to that statute a worker is an employee, as opposed to an independent contractor, unless the employer can show that the worker’s services are “performed outside the usual course of the [employer’s] business.”
By definition, the work of selling real estate is within the usual course of the real estate business. Not even the most flexible mental gymnast could persuasively describe the work of a real-estate salesperson as falling outside the usual course of a real-estate businesses’s business, at least not with a straight face.
But today in Monell v. Boston Pads, LLC, the Supreme Judicial Court (SJC) held that yes, a real-estate salesperson may indeed work as an independent contractor, a decision that should come as a relief to those in the real estate business.
The reason for the Court’s decision has to do with the interplay of two statutes, and a canon of statutory construction. One statute is the independent-contractor statute, which deals with employment in general. The other deals specifically with real-estate licensing (Chapter 112, Section 87R) and expressly provides that salespersons may affiliate with brokers as either employees or independent contractors. If the independent-contractor statute controls, then salespersons must be employees, whether they like it or not. If the real-estate licensing statute controls, they can be independent contractors.
To resolve the conflict, the SJC relied on the principle that “a specific statute controls over the provisions of a general statute.” In this case, the more specific statute is the one that governs the real-estate business, which, therefore, prevails over the general independent-contractor statute.
As I mentioned in a previous post on this subject, in Massachusetts the independent contractor remains on the endangered list but is not yet extinct.