For more than 40 years, the tax code has said real estate agents are independent contractors. Federal labor law never got the memo.
A bipartisan House bill would remove real estate agents from the federal labor law definition of “employee,” bringing the Fair Labor Standards Act in line with how the tax code has classified agents for more than four decades.
H.R. 3495, the Direct Seller and Real Estate Agent Harmonization Act, has 31 cosponsors, 20 Republicans and 11 Democrats. Rep. Kevin Kiley, I-Calif., introduced the bill with Rep. Henry Cuellar, D-Texas, in May 2025, when Kiley was a Republican. The House Committee on Education and Workforce advanced it in September 2025 and filed its report in February, sending it to the full House for consideration.
The bill would exclude qualified real estate agents and direct sellers from the FLSA’s definition of an employee, matching Section 3508 of the Internal Revenue Code. Agents covered by the change would fall outside the law’s minimum wage and overtime requirements.
“Clarifying our labor laws will support hard work and innovation while providing workers with the flexibility they so clearly need,” Kiley said in a statement after the committee vote in September 2025.
The Congressional Budget Office estimated the bill would reduce the penalties the Labor Department collects for FLSA violations and add less than $500,000 to the deficit from 2026 to 2035. CBO classified the bill as a private-sector mandate because workers it excludes would lose the right to seek remedies under the FLSA. The mandate’s cost falls below the federal reporting threshold, according to CBO.
The Labor Department has a separate proposal on independent contractor classification. In February, it moved to rescind a 2024 rule and replace it with an approach similar to one the department adopted in 2021.
The National Association of Realtors supports the bill. Shannon McGahn, NAR’s chief advocacy officer, said in a statement after the committee vote that 89 percent of NAR members are classified as independent contractors and that the bill would reduce “unnecessary confusion and regulatory burdens.”
Health coverage is one of the costs agents carry as independent contractors. Brokerages can’t offer 1099 agents a traditional W-2 benefits package, leaving agents to find coverage on their own, SERHANT. founder and CEO Ryan Serhant wrote in a recent Inman op-ed. Uneven commission income makes it hard to estimate a year’s earnings when applying for ACA marketplace subsidies, Serhant writes, and an agent who guesses too low can owe money at tax time.
NAR wants self-employed agents to have another option. The trade group is pressing the Labor Department to let them buy coverage through association health plans offered by trade groups, including local Realtor associations. NAR officials met with the White House, the Labor Department and the Department of Health and Human Services on the issue, and the department’s proposed rule is expected in November, according to NAR.
H.R. 3495 is one of several bills NAR is pressing ahead of the midterms. After the 21st Century ROAD to Housing Act became law in July, the trade group shifted its focus to supply and affordability measures, including the More Homes on the Market Act, which would double the capital gains exclusion on home sales. Inman’s guide to the 11 most consequential housing bills to watch before the midterms breaks down what each would do and where it stands in Congress.
