Brokerage Liability for Personal Assistants

Who has legal responsibility for the actions of your real estate assistant? If the assistant is hired as an employee of a brokerage, then the broker is ultimately responsible — just as the broker is responsible for all other employees of the company. The same is true if the brokerage allows a salesperson, who is an employee, to hire an assistant.

But what about the more common scenario in which a broker allows salespeople in the office who are independent contractors to hire their own assistants, either as employees or independent contractors? While less certain, the broker still may ultimately be responsible for the assistant’s actions due to the fact that the salesperson is licensed with the broker.

This responsibility may include ensuring that the unlicensed assistant follows the licensing laws of the state and does not violate other laws, such as federal fair housing rules. The broker’s liability would depend upon the particular facts of each case.

Because of this potential liability, there are several actions a broker should take prior to anyone in the company hiring an assistant:

  • Check with the state real estate commission to determine its views on the supervision of real estate assistants. Many state real estate commissions have developed supervisory guidelines to assist them in determining the liability of brokers when complaints regarding assistants are received. These supervisory guidelines may apply to a broker regardless of whether the unlicensed assistant is an employee or independent contractor.
  • Develop an office policy outlining the use of unlicensed assistants and the procedures for their supervision, whether handled by the broker or the individual salesperson. This policy should be developed with the aid of an accountant and an attorney as the degree of permissible supervisory control will differ when the assistant is an employee vs. an independent contractor. In any event, a broker should not permit a salesperson to hire any assistants without first having his or her own policies in place.
  • Document the relationship through job descriptions for employees and written agreements for independent contractors. Hiring real estate assistants requires careful planning by both the broker and salesperson as to the duties to be performed by the assistants, the amount of control to be exerted over them, their status for tax purposes, and the supervisory procedures to put in place in the office.

Source: Real Estate Brokerage Essentials: Managing Legal and Business Issues (NATIONAL ASSOCIATION OF REALTORS®, 2006). Order at REALTOR.org or by calling 800-874-6500;
cost is $38.95 for members and $73.45 for nonmembers.

Workers’ Compensation Insurance

State workers’ compensation insurance covers injuries that employees sustain while performing job functions. If your assistant is an independent contractor, you are not responsible for contributing toward workers’ compensation insurance. Approximately one-third of states exempt employers with only a few employees, according to the legal Web site Nolo.com. However, depending on where you live, you could be responsible for purchasing workers’ compensation insurance. For more information on state-by-state requirements for workers’ compensation, visit the U.S. Small Business Administration.

Mistakes and Fraud

Both you and, in many cases your supervising broker, may be liable for errors and fraud committed by your personal assistant. You also may be subject to penalties under your state’s license law for any violations by your assistants. If your assistant holds a real estate license, your liabilities may be less. The good news is that your assistant may be covered automatically under your errors and omissions insurance. You should check your policy’s definition of “insured” to be certain it also covers employees. If not, ask the company to add an endorsement to the coverage.

Sexual Harassment

Sexual harassment is any verbal or physical conduct of a harassing nature, requests for sexual favors, unwelcome sexual advances, or other conduct that could interfere with a worker’s performance or create a hostile or intimidating atmosphere. As an employer, it’s your legal obligation to help protect your assistant from sexual harassment — whether from co-workers or clients. Also keep in mind that sexual harassment can occur regardless of gender or sexual preference.

If a charge of sexual harassment occurs, you should:

  • Keep the charges confidential.
  • Take the charges seriously.
  • Don’t jump to conclusions; there are always two sides to every situation.
  • Interview the assistant to obtain more details. (Keep written records of all interviews.)
  • Interview other concerned parties and witnesses, as discretely as possible. In many cases, it’s beneficial to have both a man and a woman interview both parties.
  • Take necessary action to correct the situation.

In most cases, says Doug Hinderer, senior vice president of human resources for the NATIONAL ASSOCIATION OF REALTORS®, talking to the offender is all it takes to remedy the situation. Often, people are not aware that their actions are offensive.

Note: This information provides general legal information and should not be relied upon as legal guidance. Before acting, both the relevant laws and legal counsel should be consulted. This information should not be construed as specific legal advice nor as an opinion on particular facts, cases, or situations.

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