Sponsors (32)
The bill reduces payroll costs and (for some) classification uncertainty for commission-based sellers by excluding them from FLSA wage-and-hour rules, but it does so by removing worker pay protections and raising misclassification, enforcement, and social-safety-net risks.
Small business owners and brokers would face lower payroll costs because direct sellers and qualified real estate agents would be excluded from FLSA wage-and-hour requirements.
Commission-based sellers (e.g., many direct sellers and qualifying real estate agents) gain clearer federal classification by aligning FLSA coverage with the IRC §3508(b) tax definition, reducing some legal uncertainty about status for tax-classified independent contractors.
Direct sellers and many real estate agents would lose FLSA protections such as minimum wage and overtime, which could reduce their take-home pay and increase income volatility.
Commission-based workers face increased risk of misclassification because the bill ties FLSA coverage to a tax-code definition designed for different purposes, potentially stripping workers of labor protections.
State and federal enforcement complexity and litigation could rise as the Department of Labor must interpret a tax-based test for wage-and-hour coverage, increasing compliance and legal costs for employers and workers.
Based on analysis of 2 sections of legislative text.
Excludes IRC-defined direct sellers and qualified real estate agents from the FLSA "employee" definition, removing federal wage-and-hour coverage for those categories.
Official title: To amend the Fair Labor Standards Act of 1938 to clarify the definition of employee as it relates to direct sellers and real estate agents, and for other purposes.
Introduced May 19, 2025 by Kevin Kiley · Last progress May 19, 2025
Amends the Fair Labor Standards Act definition of “employee” to exclude any person who is a “direct seller” or a “qualified real estate agent” as those terms are defined in the Internal Revenue Code. The change makes those IRC definitions automatically control whether an individual is covered by federal minimum-wage and overtime protections under the FLSA. The amendment creates a statutory cross-reference so the FLSA will not treat such direct sellers or qualified real estate agents as employees for purposes of wage-and-hour coverage, which shifts legal treatment of many sales and real-estate independent contractors and may change enforcement and litigation outcomes.