A policy proposal out of Washington could impact how real estate agents do business for years to come.

I'm Kathy Fedke, and this is Real Estate News for investors.

This is Real Estate News with Kathy Fedke.

The National Association of Realtors, also known as NAR, is backing a new proposal from the U.S. Department of Labor that could bring more clarity to how independent contractors are classified.

Most real estate agents in America work as independent contractors, not employees.

In simple terms, an independent contractor is someone who runs their own business.

They choose when they work, how they market themselves, who they work with, and how they build their income.

Back in February, the Labor Department proposed a new framework for deciding whether a worker should legally be considered an independent contractor or an employee.

The proposal uses what's called an

economic reality test. That test looks at five factors to determine the true working relationship,

but two factors carry the most weight. First, how much control a company has over the worker.

Second, whether the worker has the opportunity to make a profit or take

a loss based on their own business decisions. And third, how permanent the working relationship is.

Fourth, whether the work being performed is central to the company's business. And fifth,

how much skill, initiative, or specialized expertise the worker brings to the job.

NAR says this approach better reflects how real estate professionals actually work in today's

economy. According to NAR, the real estate industry represents roughly 20% of the U.S.

economy, and millions of agents operate as small business owners.

NAR says clearer rules would help brokers and agents better understand their responsibilities,

while reducing confusion that can come from shifting federal interpretations.

NAR is also asking the Labor Department to go one step further.

The organization wants an explicit

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