Real Estate Licensee Salesperson's Assistants

By Brett M. Woodburn, Esquire and Thomas S. Lee, Esquire

President Harry S. Truman is credited with coining the phrases: "The Buck Stops Here!" "The buck stops here" derives from the expression "pass the buck," meaning passing the responsibility for something to someone else. In a real estate brokerage, the "buck" stops with the broker.

As attorneys who represent real estate licensees through the PAR Hotline, we have be aware of an increasing number of salespeople are hiring their own unlicensed assistants. While brokers may be inclined to pass all responsibility for these unlicensed employees on to their salespeople, remember, the "buck" stops at the broker's desk.

Under the Real Estate Licensing and Registration Act ("RELRA'), a broker is obligated to supervise all individuals who work at the brokerage. This obligation extends to unlicensed employees, regardless of whether they work for the brokerage or a salesperson. When the decision is made to hire someone, a number of legal considerations come into play. What information is being requested in an application? Is a credit report or a criminal background check being run? Have the proper disclosures and authorizations by the applicant been exchanged? How is this employee going to be paid? Is the unlicensed assistant an independent contractor or an employee? If an employee, have the proper mechanisms been put in place to account for local, state and federal withholding requirements? Does the salesperson or the broker (or both) have workers' compensation coverage? This is not like hiring a teenager to cut the grass!!

There may be any number of good business reasons to permit licensees to hire unlicensed assistants, but brokers should have a policy on how this type of hiring will be permitted, and the broker should be involved in the final hiring decision. As a broker, you will have different criteria that need to be met, different policies that need to be enforced and followed, and ultimately the authority to hire and fire. It is important that all employees – licensees and unlicensed assistants – know where the "buck" stops.

It is also important to recognize that when decisions to hire are made, decisions to fire are not far behind. Under what circumstances can you fire an unlicensed assistant? Must there be cause? When are unemployment benefits triggered? Is the conduct that leads to the decision to fire protected under some state or federal law? Are there office policies in place that warrant immediate termination? Should there be? Brokers are well advised to talk with their attorney when considering when, how and if they will permit salespeople to hire.

The bottom line is that the broker is ultimately responsible for everyone who works at the brokerage, including non-licensed assistants. A carefully thought-out policy that is shared with all licensees is a good first step to limiting a broker's exposure if and when salespeople are permitted to hire.

Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2012
All Rights Reserved