This article is Part II in a series explaining the legal assistance offered to individuals impacted by the novel coronavirus (COVID-19), relating to real estate and the housing market. Check out Part I for an explanation of legal assistance available to small businesses, homeowners and renters.
The licensee struggle
In mid-April, Americans began receiving government stimulus checks of up to $1,200 in response to the coronavirus (COVID-19) outbreak.
Many individuals have yet to receive their payments, including those receiving physical checks as opposed to direct deposit. And while news of a second round of payments rumbles, many wonder about the effectiveness of this measure when it comes to self-employed or gig economy workers, often classified as independent contractors.
Although real estate agents are employed by a broker, most are classified for tax purposes as independent contractors. Licensed brokers who are not broker-associates are, of course, self-employed. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed by congress in late March, provides some assistance for small businesses such as brokerages, including the Paycheck Protection Program (PPP), which is accepting additional applications as of April 27.
Related article:
How legislation is helping brokerages, homeowners and renters during COVID-19
A real estate licensee’s profession relies on the agent being able to represent clients, an act which in turn relies on both the agent’s physical presence as well as supply and demand for new homes. Since these factors are taking a hit from the spread of COVID-19 — along with the 2020 recession whose effects the virus has kicked into gear — industry professionals are understandably worried about how their businesses will fare as both the pandemic and the recession hit their stride.
While agents have been dealing with limitations by offering virtual home tours and fulfilling their agency obligations remotely, the pressing question is: how can licensees maintain their businesses in the face of a rapidly declining market?
Related article:
Relief for independent contractors
While the system that classifies real estate agents statutorily as independent contractors causes these agents to lose out on many of the benefits of traditional employment, it does mean agents are eligible for assistance outlined in the CARES Act. This assistance includes:
- the direct payments of up to $1,200 per adult; and
- expanded unemployment benefits to apply to independent contractors such as real estate licensees, including $600 per week for a four-month period.
To receive unemployment assistance under the CARES act, an individual needs to prove they:
- have contracted, experienced symptoms of, or are seeking a diagnosis for COVID-19;
- are caring for a family member diagnosed with COVID-19 or that a member their household has been diagnosed with COVID-19;
- are the primary caregiver for a child who cannot attend school on account of COVID-19 restrictions;
- are unable to travel to their workplace on the advice of a health care provider to self-quarantine;
- have a workplace that has been shut down as a direct result of a COVID-19 public health emergency;
- have lost their job as a result of COVID-19; or
- provide the bulk of their household income after the previous head of household has died from COVID-19.
Independent contractors are also eligible for additional protections such as expanded paid sick leave benefits under the Families First Coronavirus Response Act (FFCRA).
For more information on resources to help with the pandemic, see the U.S. Department of Labor’s coronavirus resources webpage.
While COVID-19 has, and will continue to have, an outsized impact on the real estate industry, owing to the face-to-face nature of the work, the industry will face just as big of an impact from the long-in-coming recession the virus has exacerbated.
To learn how to prepare for and react to the effects of this recession, check out our guide on staying ahead of the 2020 recession.
