National association of realtors | Independent Contractor Status |

Independent Contractor Status


NAR opposes any erosion of the statutory provision of the the Internal Revenue Code Section 3508, which provides clear directives about how a real estate broker may classify his/her sales agents as independent contractors.

Political Advocacy

Current Legislation/Regulation

None at this time.


Issue summary - Federal Tax / Independent Contractor

Issue summary - Business / Worker Classification

NAR Federal Issues Tracker

Legislative Contact(s):

Evan Liddiard


Joe Harris


Regulatory Contact(s):

Evan Liddiard


What is the fundamental issue?

One of the thorniest questions that many businesses face is the appropriate classification of their workers as either employees or independent contractors. These classification issues are important because they govern responsibilities for remitting payroll taxes and also set out the terms for various employee benefits.

Real estate sales agents have a statutory provision (Internal Revenue Code Section 3508) that provides clear directives about how a real estate broker may classify his/her sales agents as independent contractors. The rules have been in place since about 1984. REALTORS® would oppose any erosion of Section 3508.

I am a real estate professional. What does this mean for my business?

Under Section 3508, brokers and sales agents can determine with certainty what their work arrangements are and can thereby ascertain the role of each with respect to payroll taxes and benefits.  This certainty significantly reduces the exposure to sizable penalties that can be imposed on other employers who do not comply with the worker classification criteria the IRS has had in place for more than 30 years.

To be classified as an independent contractor, a broker and a sales agent must have a written agreement showing that the sales agent has a valid real estate license, that the sales agent is aware that he/she will be treated as an independent contractor, and that no compensation or remuneration can be based on hours worked, but rather is on a commission basis.

NAR Policy:

NAR would oppose any erosion of the statutory protections in Section 3508.

Legislative/Regulatory Status/Outlook

There appear to be no likely imminent changes for section 3508, the provision in the tax law that provides qualified real estate agents (among others) with a statutory classification as independent contractors. However, several legislative proposals have been introduced over the last few years that would change the worker classification rules for service providers who are not covered by section 3508. 

NAR Committee:

Federal Taxation Committee


Featured Links

Bloomberg Government: The Workforce of the Future Infographic

Bloomberg Government: The Workforce of the Future

Related: Worker Classification 

NAR strongly supports the continued right of brokers to choose whether to classify agents as employees or independent contractors. NAR supports actions at the state level to strengthen the rights of brokers to make these determinations and will resist efforts at the federal level to weaken those rights.

Issue Summary

Find the information, education, and connections you need to thrive in the growing field of international real estate.

Commitment to Excellence
Developing and enhancing 11 competencies that indicate a REALTOR®'s commitment to ethics, advocacy, technology, data privacy, and customer service.