The PRO Act: What It Means for Real Estate Agents

The Protecting the Right to Organize (PRO) Act was passed by the House of Representatives on 3/9/2021. This legislation aims to amend the National Labor Relations Act, which would make this a huge change to current U.S. labor laws. While this proposal has made it through the House, it still has to pass in the Senate to get the chance to be signed into law by President Biden. But what do real estate agents need to know about this new piece of legislation?

The PRO Act

The PRO Act will affect employees and employers alike. From unionization regulation to right-to-work laws, this legislation looks to modernize the current labor laws. Taking lessons from California’s 2019 Assembly Bill 5, there will be changes made to the status of freelancers and independent contractors. Here are some of the impacts you can expect to see if The PRO Act is passed.

State’s Right-to-Work Laws

There are twenty-eight states that have right-to-work laws. These laws stop unions from making contracts with employers requiring employees to pay union dues in order to keep their employment. Those in favor of unions see this change as giving many a free ride into a union by not requiring employees to pay fees while enjoying the benefits that a union provides. The PRO Act would require those wanting access to the union to pay a fee as well as collecting dues from those who opt out of the union, covering the cost of collective bargaining and administration of the union contract.

Regulation of Unionization

In an effort to protect workers’ right to join a union, the federal laws surrounding unionization will be strengthened under The PRO Act. Workers are encouraged to exercise their right to organize, and employers will be held accountable if they’re found violating any worker’s rights. Union elections will be free, fair, and safe, and employers will be prevented from interfering with these elections.

Independent Contractor Test

California’s ABC Test has been used to determine if someone is considered an independent contractor, and The PRO Act will follow suit. The three stipulations used within the ABC test to determine if someone is an independent contractor are as follows:

• The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
• The person performs work that is outside the usual course of the hiring entity’s business.
• The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

The PRO Act and Real Estate

With all of these changes, we could see the real estate industry shift gears in terms of brokerage operation. Under The PRO Act, brokerages would have to hire agents as employees and offer benefits such as health insurance. Most real estate agents are independent contractors and, if passed, this legislation would make it illegal for this practice to continue. It is unclear if real estate agents will be exempt from this new law as they have been in the past.

NAR has been pushing for independent contractor protections, looking to keep real estate agents exempt from this new legislation. “NAR’s advocacy team worked with lawmakers in the House to ensure REALTORS® would not be negatively impacted and to support an amendment that would protect existing state definitions of ‘employer’ and ‘employee.’ We are currently working to ensure this language is included in the Senate version,” says NAR Chief Advocacy Officer Shannon McGahn.

No need to worry – we don’t know if this legislation is passing just yet. While it’s fairly likely an exemption will be made for real estate agents, there is still a possibility that certain aspects of the industry will change. If The PRO Act does pass, there are many advocates speaking on behalf of real estate agents, like those at NAR, so we’re hopeful no undue burdens fall on our industry.

Disclaimer: This is a guest post written by the real estate experts at The CE Shop. The CE Shop is the leading provider of online real estate education with convenient courses available in all 50 states and D.C. To find out more about The CE Shop and the resources they provide, visit TheCEShop.com.