Before leaving a real estate brokerage firm, associates should thoroughly review their independent contractor agreement to find out what portion of commission, if any, the associate will be entitled to after leaving.

ORLANDO, Fla. – Question: I’m a sales associate who switched real estate companies a few months ago. I thought everything was in order, but when my former broker paid me for a transaction that closed, the amount didn’t match the split we had when I worked there. My former broker can’t do this to me, can he?

Answer: It generally depends on the terms of your independent contractor agreement, although additional office policies and procedures could also come into play.

An independent contractor agreement is a contract between a sales associate and real estate brokerage firm. It could be an oral agreement, but most are written contracts. They’re typically part of onboarding paperwork that associates sign when they begin working for a company. The terms of this agreement can vary from one associate to the next, even within the same firm, so it’s vital to read the actual contract to find out what rights and obligations each side receives.

Florida Realtors® provides an independent contractor agreement form, form ICA, which we will examine as a sample, but beware: Many companies use their own agreement, and it could be wildly different from Florida Realtors’ form.

The ICA addresses compensation after termination of the agreement in Section 3(c)(6), which provides that “After termination of this Agreement, Broker will pay Associate any amount earned before termination less amounts owed to Broker and amounts Broker must pay another licensee to complete pending transactions for which Associate was responsible before termination.” Under this clause, the associate can demand earned commission, but it might not be the full amount the associate would have received if the associate still worked for the company. The broker is entitled to deduct the former associate’s debt to the company, as well as a reasonable amount to pay another licensee who helped close the deal after the associate left.

So, what can an associate do if the independent contractor agreement provides the associate is entitled to commission, but the broker refuses to pay? The short answer: The next step is to sue, typically by hiring a lawyer for representation.

It often disappoints associates to hear that the FREC won’t immediately intervene on compensation issues like the one discussed above, but Florida Statutes 475.25(1)(d) requires the associate first win the case. The correct time to file a FREC complaint is only after obtaining a civil judgment for a share of a real estate commission if the broker still refuses to pay.

Please note that this article is just a broad-brush picture of the issue, so members working through it (brokers and associates alike) should consult a lawyer as soon as possible to get a firsthand opinion of the strengths and weaknesses of their prospective case.

Joel Maxson is Associate General Counsel
Note: Information deemed accurate on date of publication

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