Independent Contractor Agreements and Company Policy Manuals

It has recently become clear to me that my real estate colleagues and I need to stay abreast of changes in company policy manuals.  If something doesn’t sit well, agents should insist on changes to their independent contractor agreements or simply refuse to sign them.  There are plenty of real estate brokerage companies who will fairly negotiate these agreements and be sure you are working with one of them.

Keeping in mind the frequency with which agents move from company to company in our industry, one must be mindful of anything in an agreement that will directly affect future earnings upon departure from their current firm.  Regular review of these documents could avoid bad feelings or even future litigation with your broker of record. 

Here are a few things to look for:

  • Broad reaching statements in agreements such as "you agree to abide by all policies in the company policy manual which may be amended at any time the company’s sole discretion."
  • "This agreement shall renew annually."  No way, make sure you see a new one each year.
  • Insist on direct notification of policy manual changes and make it known immediately in writing if you do not accept any of these changes.
  • Company policies that entitle the brokerage to keep additional commissions upon your departure (some companies, not all, will attempt to penalize as much as 30% when you leave).
  • Policies requiring reimbursement for advertising expenses or other fees such as assistant salaries incurred by the former company during your tenure as an income producing agent for them.

These are just a few of the things to look for before signing an independent contractor agreement with anyone.  Also be mindful that just because something is written in a company policy manual doesn’t make it ethical or even legal in some cases.

Some brokerages out there do their very best to dissuade current agents from fleeing. Despite these desperate efforts, many still see the greener grass on the other side.

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