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California Real Estate Agents Entitled to Overtime

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Real estate agents have asked a California federal judge to approve a settlement to resolve a lawsuit alleging they were misclassified and therefore entitled to overtime.

Santa Clara, CAA California wage and hour lawsuit filed by a real estate brokerage operator and almost 3,000 agents is close to settlement. The lawsuit, which was filed three years ago, alleges Redfin Corp. misclassified the real estate agents as independent contractors to avoid paying overtime wages, and other California labor law violations.

The motion for final approval of class settlement was filed September 6th in the U.S. District Court, Southern District of California. Plaintiffs Jason Bell and Devon Cook said both sides have agreed to a $3 million settlement after considering the risks associated with continuing the case, even though they opinions differ on California wage and hour laws. According to Law360, Bell said the settlement will provide class members with significant monetary relief: The $3 million fund represents between 6.6% and 12% of the workers' maximum recoverable damages, which Bell said is justified by the substantial risks inherent in continuing the litigation and consistent with similar class settlements. Each class member who brought the claims -- associate agents who worked for Redfin from April 30, 2017, through Dec. 31, 2022, and employee agents who worked for the company from Nov. 20, 2016, through Dec. 31, 2022 --will receive an estimated average payment of $658, with the highest class member payout about $5,035.

Bell worked as a Redfin agent for one year before he was fired in December 2019. He filed the complaint in November 2020, claiming numerous violations of the California labor code, Business and Professions Code, Private Attorney General Act (“PAGA”), and applicable Industrial Welfare Commission (“IWC”) wage order against employees of Redfin. The lawsuit states the following violations:
  • failing to provide the statutorily required meal and rest periods
  • failing to pay the statutorily required meal period and rest period premium wages when not provided
  • failing to pay all minimum, regular and overtime wages due
  • failing to pay wages in a timely fashion, including at the end of employment
  • mis-classifying employees so as to avoid payment of wages
  • failing to keep statutorily required payroll records

Work for Free

According to the lawsuit, Bell’s offer of employment from Redfin specified that he would be working from Redfin’s Carlsbad office, receive a gross salary of $12,000, subject to appropriate tax deductions and withholdings, and based on an offer of a full time (minimum of 40 hours/week) position. The offer vaguely referred to Bell’s possible eligibility to a “bonus” for closed transactions; however, he never received any bonuses while employed as a full-time employee. The gross salary amounts to approximately $5.77 per hour.

In 2019, minimum wage in San Diego County was $12.00 per hour for employers employing 26 or more employees. Also, the minimum salary for most exempt employees in 2019 was $49,920 in California. As a salaried employee, Bell was expected to work more than 40 hours a week, and often worked between 60-80 hours in a given week. However, as a compensation, he received less than $500 for every two weeks. For instance, for the weeks of January 6 through January 19, Bell received $390.07 after deductions of taxes and state withholdings of $71.47. 26.  And separately from his salary, Bell received an additional pay a few times for having to attend “events” such as house showing, and he had to drive to and from houses; possibly show houses and drive potential buyers to other houses; and possibly having lunch with potential buyers. As well, two Redfin agents were also required to complete various paperwork, prepare and review agreements, and office duties.  Further, Bell was not reimbursed when working at home, including his use of internet and his cellular telephone.

Redfin is a large real estate brokerage firm with multiple locations within the U.S. The firm charges consumers a percentage fee to list their homes on its website and hires agents such as Bell to sell these homes. Bell stated that Redfin failed to account for all the time he and other employed agents worked and failed to fully compensate agents for all working time; Redfin failed to pay even minimum wages, or the minimum required salary, while expecting Bell and other agents to work more than 40 hours every week.

Independent Contractor Misclassification

After March 2019, Redfin classified Bell as an independent contractor rather than an employee. Bell says this classification was made in order to avoid paying benefits such as overtime and avoid complying with California labor laws. But nothing changed. Redfin still had the same control over Bell, demanded compliance with its regulations; completion of full-time work hours; and use of Redfin’s materials in attending house showings. The lawsuit states that Redfin improperly characterized Plaintiff and other Agents as independent contractors who merely utilize Defendant’s offices and supplies to provide services to provide customer support and solicit sales. In fact, Plaintiff and other Agents are subject to high levels of control by Defendant over their wages, hours and working conditions… [agents were classified] as independent contractors so as to conceal the true nature of the relationship between Defendant and their Agents: that of employer and employees.

Redfin continued to:
  • Retain the right to terminate Agents without notice if they fail to adhere to any part of the Agreement.
  • Require Agents to comply with its numerous policies and procedures, or face possible termination.
  • “Hold” Plaintiff’s license if a complaint was lodged against Plaintiff, essentially prohibiting Plaintiff from working elsewhere.
  • Expect Plaintiff to work full time for Defendant, despite classification as an independent contractor, and Plaintiff could not have an opportunity to work elsewhere and was fully dependent on Defendant.
  • Maintain how Plaintiff was required to dress, required extensive level of training and classes, and controlled Plaintiff’s work in every aspect – from imagining of files, to script of what to say, to training Plaintiff was required to procure from Defendant or per Defendant’s requirement.

The case is Bell v. Redfin Corp., case number 3:20-cv-02264, in the U.S. District Court for the Southern District of California.


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