A bill introduced in the Senate on Sept. 30 would write real estate agents out of the federal minimum wage and overtime law, settling by statute a classification question that has so far been decided case by case.
Sen. Mike Lee, R-Utah, introduced the Direct Seller and Real Estate Agent Harmonization Act, numbered S. 5646, which was read twice and referred to the Senate Committee on Health, Education, Labor and Pensions the same day. It has one cosponsor. The National Association of Realtors, which reported the introduction in its Washington Report that afternoon, identified the cosponsor as Sen. John Curtis, also a Utah Republican.
Two sentences of statutory text
The bill is two pages long and does one thing. It amends Section 3(e) of the Fair Labor Standards Act of 1938, the provision that defines who counts as an “employee,” by adding a new paragraph. The text reads: “The term ’employee’ does not include any direct seller or qualified real estate agent (as such terms are defined in section 3508(b) of the Internal Revenue Code of 1986).”
Section 3508(b) of the tax code is the existing definition that treats qualified real estate agents as non-employees for federal tax purposes. The effect of the bill, according to the summary Lee’s office published in September, would be to “establish these workers as independent contractors β not by subjective interpretation but by statute β aligning federal law with federal tax code.”
The test the bill would replace
Today, whether a worker is an employee under the wage law turns on the Labor Department’s economic realities test. Lee’s summary describes it as weighing the permanence of the working relationship, who is its primary beneficiary, which party holds control, and who has the greater opportunity for profit and loss. Under that analysis, the summary says, agents and direct sellers “have typically been designated as independent contractors and, as such, have not been entitled to minimum wage, overtime compensation, or other employer benefits.”
The document is also candid about what the arrangement is worth to the firms involved. Direct selling and real estate work arrangements, it says, “offer significant savings for companies, as it removes their obligation to provide health coverage, life insurance, minimum wage, and other employer-sponsored services.” It adds that the worker “also benefits from a personally controlled income and work-life flexibility.”
The stated reason for acting now is litigation. Since 2015, the summary says, “class action lawyers have begun encouraging these workers to sue for employer benefits, claiming improper employee designation,” and it argues those suits “threaten the independent worker model.” It puts the population at stake at “roughly over 6 million direct sellers and realtors.” That is a sponsor’s figure covering both industries, not a count of licensed agents.
The House version is further along
S. 5646 is the Senate companion to a bill that has been moving for more than a year. Rep. Kevin Kiley, R-Calif., introduced the House version, H.R. 3495, on May 19, 2025. It now carries 31 cosponsors, and the House Education and Workforce Committee filed a supplemental report on it β House Report 119-494, Part II β on Sept. 8, 2026 β a stage a bill reaches only after a committee has reported it out.
Neither bill has received a floor vote. The Senate referral to the health and labor committee is the first step, and S. 5646 is at the beginning of the process its House counterpart has spent 16 months working through.
What it would and would not change
For agents, the practical question is narrow but consequential. Independent-contractor status is already the industry norm, written into brokerage agreements and into the federal tax code. What the bill removes is the possibility that a court applying the economic realities test reaches the opposite conclusion about a particular brokerage’s agents β and with it, the exposure to back-pay and overtime claims that such a ruling would create.
What the bill does not do is address commissions, antitrust exposure or the commission litigation of recent years. It is a wage-and-hour provision, and it leaves the rest of agents’ legal landscape untouched.
NAR, which has been pushing on the issue, said in its Washington Report that it “continues to advocate in support of independent work and real estate professionals” and will keep tracking the legislation. The note was written by Nia Duggins, the association’s business issues policy representative.
On our reading, the bill’s odds have less to do with real estate than with the direct-selling industry it is paired with, and with whether the Senate committee takes up a worker-classification measure at all in an election year. It is worth noting that a bipartisan bill to double the home-sale capital gains exclusion has drawn far broader support in Congress this session without reaching a vote either, and that a separate House effort to overhaul the Consumer Financial Protection Bureau shows how long housing-adjacent bills can sit once reported. Our continuing coverage of the business is in agents and brokerages.
