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Kennedy vs. Weichert: What it Means for You
What would our industry look like if agents had to be classified as employees? Thanks to the New Jersey REALTORS®, our agents can still work with their Broker as an independent contractor. In a landmark May 13, 2024 decision, the New Jersey Supreme Court ruled unanimously in James Kennedy, II v. Weichert Co. that independent contractor agreements between real estate brokers and salespersons are legally binding under the New Jersey Wage Payment Law (WPL). This means real estate salespersons identified as independent contractors in these agreements are not considered employees and are thus excluded from the WPL.
The Court’s decision is rooted in the 2018 amendments to the New Jersey Brokers Act, which play a crucial role in defining business affiliations between brokers and salespersons as either employment relationships or independent contractor arrangements through written agreements. The term ‘notwithstanding’ in the amendments is key, as it indicates these agreements are to be honored, even if they conflict with other laws or regulations.
Supporting this, the 2022 amendments clarified that the 2018 changes apply retroactively, reinforcing the enforceability of such independent contractor agreements. Consequently, in the Kennedy case, the Court ruled that the plaintiff, who agreed to work as an independent contractor, must be treated as such under the WPL. This ruling is a major victory for New Jersey’s real estate industry, providing brokers and salespersons the flexibility to structure their business relationships.
This landmark decision, which upholds the right for brokers and salespersons to enter into independent contractor or employee agreements, is a testament to the proactive stance of the New Jersey REALTORS® and the power of a comprehensive, multiyear-long lobbying effort. This effort, initiated in 2017, aimed to change the New Jersey Real Estate Commission regulations to identify independent contractors under a brokerage firm.
It was then codified into statute in 2018 when signed by Gov. Murphy. In 2019, we continued our advocacy with additional legislation that ensured the codified regulation was both retroactive and prospective.
This is the value of the New Jersey REALTORS®.
