§1446. Compensation; independent contractor status of salespersons and associate brokers

A. No payment of a commission or compensation shall be made by any licensee or registrant to any person who has not first secured a license or registration under the provisions of this Chapter. This Subsection shall not apply to a nonresident broker who is currently licensed in his state of residence.

B. No payment of a commission or other compensation shall be made by any broker to any licensee when the paying broker has knowledge that the receiving licensee has agreed to pay or intends to pay or otherwise deliver a portion of the commission or compensation to an unlicensed person or entity.

C. Associate brokers, salespersons, and timeshare interest salespersons shall not pay or offer to pay any commission or valuable consideration for the performance of any act herein specified.

D. Payment of a commission or compensation may be made to and accepted by former licensees and registrants for transactions negotiated by them while duly licensed or registered by the commission.

E. An active licensee may accept compensation for transactions that were initiated by the licensee while under sponsorship of a former sponsoring or qualifying broker, provided that the compensation is transmitted through the current sponsoring or qualifying broker.

F. An active real estate licensee shall not accept a commission or other valuable consideration for the performance of any act herein specified, or for performing any act relating thereto, from any person, except their sponsoring or qualifying broker.

G. Associate brokers and salespersons may assign or direct that commissions or other compensation earned in connection with a real estate transaction be paid by their licensed sponsoring broker to an unlicensed corporation of which the associate broker or salesperson is the sole officer, director, and shareholder, or an unlicensed limited liability company of which the associate broker or salesperson is the sole manager.

H. A sponsored real estate licensee shall be an independent contractor of the sponsoring or qualifying broker for all purposes and shall not be an employee of the sponsoring or qualifying broker, if all of the following conditions are met:

(1) The real estate salesperson or associate broker is a licensee.

(2) Substantially all of the sponsored licensee's remuneration for the services performed is directly related to sales or other output rather than the number of hours worked.

(3) There is a written agreement between the sponsored licensee and the sponsoring or qualifying broker that specifies that the sponsored licensee will not be treated as an employee.

Acts 1978, No. 514, §1; Acts 1989, No. 655, §1, eff. Jan. 1, 1990; Acts 1995, No. 1207, §1; Acts 1997, No. 845, §1; Acts 1999, No. 452, §2; Acts 2003, No. 321, §1; Acts 2006, No. 332, §1, eff. July 1, 2006; Acts 2016, No. 533, §1.