Robert Freedman is the former director of multimedia communications at NAR.
Commission-Split Policy Holds Up for Brokerage
A federal appellate court ruled that a sales associate was bound to follow the commission-split rules he agreed to at his former brokerage even though he had transferred.
July 1, 2011
Marcus & Millichap Real Estate Investment Services of Chicago Inc. v. Sekulovski; U.S. Court of Appeals for the Seventh Circuit
A federal appellate court ruled that a sales associate was bound to follow the commission-split rules that he agreed to at his former brokerage even though he had transferred to a different subsidiary.
The sales associate first worked at the Ohio subsidiary of a commercial brokerage, Marcus & Millichap. While there, he signed the independent contractor’s manual, which specified the brokerage’s commission-split policy.
Six years later, in 2005, he left to work for the Illinois subsidiary of Marcus & Millichap. He never signed a new agreement when he changed locations.
In 2007, the salesperson resigned from the brokerage. He and the brokerage could not agree on how to divide the commissions for pending transactions, so he told the title companies involved in the transactions to pay him in full.
The brokerage filed a lawsuit, arguing that the salesperson violated the terms of the brokerage policy manual by claiming the full commissions and also that he misrepresented the work he did on certain transactions. The associate filed counterclaims, alleging breach of contract and statutory wage claims. The trial court dismissed the wage claims, saying he was an independent contractor, and also ruled in the company’s favor on the other counts.
The salesperson appealed, but the appeals court affirmed the earlier verdict. The salesperson argued that since he never agreed to the terms of the independent contractor’s manual at the Illinois subsidiary, he was not bound by its terms. The court found the salesperson’s argument to be inconsistent, since he claimed on the one hand to follow the terms of the manual for compensation but rejected its application elsewhere.