From Katie Johnson, NAR General Council
2017 AE Institute, Denver
Attention to all Wyoming Brokers and Agents:
This is very important information for brokers in the state of Wyoming from WAR legal counsel and our President Shelly.
In short, if an agent does a BPO, CMA etc. for a fee, not only will that fee be subject to Workman’s comp and unemployment insurance but the entirety of their earned commissions may be as well.
A large office in our state is already being audited for this and no one knows who the state will come after next.
Your state association is pro-actively working to stop this but we will need all of you to help.
If you have any questions, please contact Steven Beazley at the WAR office. 307-237-4085 or President Shelly , 307-575-2894.
Please watch for any updates and or calls to action.
CEO, Wyoming Association of REALTORS®
777 Overland Trail
Casper, Wy 82601
ISSUE: Classification of Realtors by State of Wyoming for Unemployment Insurance and Worker’s Compensation coverage and payment obligation from Broker.
A Broker has recently been dealing with the State of Wyoming on its claim that some referral fees, especially BPO fees and any fees paid to a Licensee for Market Analysis or Consulting Fees automatically make the independent contractor an EMPLOYEE and ALL Compensation (whether fees or commissions) for that independent contractor becomes an obligation to the Broker to pay Worker’s Compensation and Unemployment Insurance for the entire amount of the compensation (no matter what the source).
The State of Wyoming Attorney General’s office, Tim Miller, Senior Assistant Attorney General, has issued the following statement:
The BPO and Market Evaluation fees paid to an agent are not commission based on the sale or rental of real estate. As such, the agents receive compensation other than commissions based on the sale or rental of real estate. The exceptions for real estate agents do not apply when an agent has received compensation other than commissions.
The bonus payments will still be considered commission per Mr. Miller. The bonuses increase the amount of the commission based on the sale of real estate, but will still be considered commission.
Real Estate agents associated with xxxxxxx are employees for purposes of UI and WC. Per Mr. Miller, this is so because under the UI statute, an employee is someone who performs services for wages, including commissions and bonuses, unless he or she is a licensed real estate broker or salesman receiving as sole compensation a commission based on the sale or rental of real estate. W.S. 27-3-104(b); 27-3-108(a)(v).
Similarly, for purposes of WC, an employee is someone engaged in employment under any contract for hire, unless he or she is a licensed real estate broker or sales person receiving as sole compensation a commission based on the sale or rental of real estate. W.S. 27-14-102(a)(vii); Workers’ Compensation Rules, Chapter 2, Section 12(a).
Further, we inquired as to whether when a payment is found that is not commission if all payments to that individual are then subject to UI and WC. The answer is yes. This is so because UI defines “wage” as remuneration payable for services from any source including commissions, bonuses and cash. W.S. 27-3- 102(a)(xviii). WC defines “gross earnings” the same way (except it excludes tips and gratuities). Under these definitions, once the agent is determined to be an employee, all of his or her remuneration constitutes wages and gross earnings. There is no carve-out for commissions; indeed, the statutes expressly include them.
As this matter will affect all Realtors around the State of Wyoming, counsel for WAR is submitting a request for clarification to the State of Wyoming. The request deals with the classification of employee under the following argument:
W.S. 27-14-102(a)(vii) excludes from the definition of “Employee” various individuals including in (D) “Any individual engaged as an independent contractor.”
W.S. 27-14-102(a)(xxiii) defines Independent Contractor as an individual who performs services for another individual or entity and:
(A) is free from control or direction over the details of the performance of services by contract and by fact;
(C) Represents his services to the public as a self-employed individual or an independent contractor; and
(D) May substitute another person to perform his services.
The majority of the licensees that work with Brokers are Independent Contractors (and meet the guidelines) and therefore are exempt under the Worker’s Compensation Statutes as set forth in the recited Statutes above. This analysis will be presented to the Attorney General’s office for further clarification. That being said, in dealing with the State of Wyoming on Independent Contractors, the licensee must meet all of the criteria set forth in 27-14-102(a)(xxiii) above. If a licensee is under and independent contractor agreement but is not free from control or direction of the details of the performance of the services and does not represent the services as self-employed or an independent contractor, then the State of Wyoming can rule that licensee to be an employee even though under an independent contractor agreement.
W.S. 27-3-104 addresses employment covered for Unemployment Insurance. Under 104(b) an individual is not considered an employee if he meets the same criteria set forth in 27-14-102(A)(xxiii) above and therefore is an independent contractor.
Therefore, in the initial legal opinion of WAR counsel is that an independent contractor that meets the requirements of the Wyoming Statute is exempt from Unemployment and Worker’s Compensation as well as a licensed real estate broker or salesperson receiving as sole compensation a commission based on the sale or rental of estate. However, if the real estate broker/salesperson is obtaining additional income through fees from providing market analysis or BPR fees, that person may be subject to worker’s compensation and unemployment programs for the full amount of commissions and other compensation.
As we await further clarification on this issue, I am advising Brokers to seek independent counsel on this issue as well as review internal controls over the independent contractors. In addition, a Broker may consider not allowing its employees/independent contractors from performing the market analysis until after this matter is resolved.
Mike Lansing – WAR Council
Shelly Duncan – WAR President
From the Desk of 2017 WAR President Shelly Duncan,
As you begin planning 2017 I thought I would pass along the top 4 goals for NAR President Bill Brown and my goals for the upcoming year. My hope is that these will support our mission that “REALTORS® drive the Revolution within our industry” and “REALTORS® are the Key”.
2017 NAR President Goals
Goal #1: American Dream of homeownership-the country’s rate has fallen from 70% to a 50-year low of 63%. NAR will provide research & data to policy makers & public to illustrate that higher homeownership benefits economy & communities.
Goal #2: Retain mortgage interest deduction & property taxes for both primary and secondary residences & protect 1031 Exchanges which allow for investors to defer taxes on commercial property.
Goal #3: Retain the federal guarantee (GSE) in the secondary mortgage market. NAR is solidly on record in support of retention of the federal guarantee. We will lobby congress and the new administration heavily on this issue.
Goal #4: To educate members on how to create a strong financial future. REALTORS® are successful in their careers, but struggle when it’s time to retire. President Brown wants to develop and promote programs and resources that will facilitate saving for retirement. He has appointed a Presidential Advisory Group (PAG) to develop programs and ideas to help our members start thinking as early as they can about saving for their future.
2017 WAR President Goals
Goal #1: Create a Broker’s Toolbox to assist Brokers with a comprehensive list and information resources from opening a new office to business practices and ideas shared by Brokers across the state.
Goal #2: Professional Standards Citation Program will be modeled after NAR’s program to help alleviate grievance complaints. A citation program is a list of infractions that a respondent can pay the citation in lieu of a hearing. Typically, these are for violations to Article 12 in NAR Code of Ethics (advertising).
Goal #3: Property Management continues to be a topic membership is wanting more education and direction from WAR and WREC. A minimum “standard of care” through education/certification and clarification of statutes for property management vs sale/purchase are issues brought forward in the last forum.
Goal #4: Homelessness and more specifically “couch surfing” are at the top of my list of social and community concern this year. I am reaching out to local boards to offer their feedback on their local communities and programs. I am working with our Laurie Urbigkit, NAR chair to Housing Opportunities Committee to develop a pilot program here in Wyoming to address the teen homelessness problem.
NAR is in the process of a CEO search to replace Dale Stinton NAR CEO (retiring after 35 yrs) and have a hiring date planned for late summer.
After receiving notice of Guyla Greenly’s resignation to pursue other ventures, WAR was pleased to announce Steve Beazley as interim CEO. We will be reviewing the current hiring process and succession plan for the CEO. The position will be opened and interviews will be conducted during the spring and early summer with a targeted start date of late summer for the successful candidate.
2017 WAR President