(WASHINGTON D.C.) – The Direct Selling Association, a national trade association representing direct selling companies, supports the bi-partisan introduction of the Direct Selling and Real Estate Agent Harmonization Act, Bill Number 5419, by Reps. Tim Walberg (R-MI), Tony Cardenas (D-CA), Henry Cuellar (D-TX), and Blake Moore (R-UT). Similar legislation has been introduced in past Congresses as applicable to direct sellers—this legislation would explicitly include real estate agents as well.
Direct sellers and qualified real estate agents have been defined as independent contractors under the Internal Revenue Code (“IRC”) for federal tax purposes since 1982. This language demonstrates the federal government’s long-standing recognition of the unique nature of the direct selling and real estate industry and, as such, the need to treat it differently than other industries. Of the 1.6 million members of National Association of Realtors (NAR) practicing across the country, approximately 87 percent are classified as independent contractors. All 7.3 million direct sellers in the United States are classified as independent contractors and sell to 44.6 million preferred customers, discount buyers and many other consumers. This important legislation would harmonize the Fair Labor Standards Act (“FLSA”) consistent with the IRC so that direct sellers and qualified real estate agents can clearly be defined as independent contractors across both statutes.
DSA President Joseph N. Mariano commended the introduction of this important legislation, saying “The independent contractor status of direct sellers has been vital to the business model for decades. This legislation recognizes there is bi-partisan support that direct sellers and real estate agents are true independent contractors. As Congress and the Administration debate the merits of independent work in our recovering economy, we hope that the independent contractor status of direct sellers and real estate agents will continue to be supported.”
While the ability to work as an independent contractor is recognized and protected under the IRC and many state laws, class action and wage and hour lawsuits, new state legislation, and new federal rules expanding the definition of employee, continue to threaten workers’ ability to be classified as independent contractors, including for real estate professionals and direct sellers. The United States Department of Labor is currently finalizing a rule on independent contractor status under the FLSA, which may result in unnecessary confusion for direct sellers and qualified real estate agents. Having Congress align the FLSA with the IRC would ensure professionals within these industries can continue to operate their businesses and support economic growth without uncertainty posed from conflicting statutes and regulations.
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