Direct Seller and Real Estate Agent Harmonization Act

Bill Number

H.R. 3495

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Labor and Employment

Status

Introduced

Latest Action

2026-02-11: Placed on the Union Calendar, Calendar No. 420.

Last Updated

2026-06-11T23:26:38Z

AI-Generated Summary

Purpose

The Direct Seller and Real Estate Agent Harmonization Act (H.R. 3495) aims to clarify the classification of certain workers under U.S. labor law. Specifically, it ensures that direct sellers (such as those in multi-level marketing) and qualified real estate agents are treated as independent contractors rather than employees, aligning labor definitions with existing tax rules.

Key Provisions

• Amendment to FLSA Definition: The bill amends Section 3(e) of the Fair Labor Standards Act of 1938 (FLSA, the main U.S. law on minimum wage, overtime pay, and working conditions) by adding a new paragraph (6).
• Exclusion from "Employee" Status: This new paragraph states that the term "employee" under the FLSA does not include:
• Any "direct seller," or
• Any "qualified real estate agent."
• Reference to Tax Code Definitions: These terms are defined using the same language from Section 3508(b) of the Internal Revenue Code of 1986, which treats these workers as independent contractors for tax purposes (e.g., direct sellers who work away from a fixed location and are paid based on sales, and real estate agents compensated primarily by commissions).

Significant Changes to Existing Law

• Clarification of Worker Status: Prior to this bill, the FLSA's definition of "employee" was broad and could lead to uncertainty or disputes over whether direct sellers and real estate agents qualify as employees entitled to FLSA protections. This amendment explicitly excludes them, harmonizing FLSA rules with IRS tax classifications to reduce ambiguity.
• No Broader Revisions: The change is narrow, targeting only these two categories without altering other aspects of the FLSA, such as overtime or minimum wage requirements for other workers.

Potential Impacts

• On Government Agencies: The Department of Labor (DOL), which enforces the FLSA, may see reduced litigation and enforcement efforts related to misclassification of these workers, potentially lowering administrative costs.
• On Citizens: Direct sellers and real estate agents (often independent contractors) will not be eligible for FLSA benefits like minimum wage or overtime pay, but they gain clearer legal status, which could simplify their business operations and tax filings. Other workers remain unaffected.
• On International Relations: No direct impact, as this is a domestic labor law clarification.

Main Stakeholders Affected

• Direct Sellers: Individuals in sales roles (e.g., for cosmetics, supplements, or household goods) who operate independently and earn commissions; they benefit from confirmed non-employee status.
• Real Estate Agents: Licensed professionals paid mainly by commissions; this reinforces their independent contractor treatment.
• Businesses and Companies: Firms in direct sales (e.g., multi-level marketing companies) and real estate brokerages gain clarity, potentially avoiding lawsuits over worker misclassification.
• Workers' Rights Advocates: Groups pushing for broader employee protections may oppose the bill, as it limits FLSA coverage for these groups.
• Government: DOL and IRS benefit from aligned definitions, easing coordination between labor and tax enforcement.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: This could reduce court cases challenging worker classifications under the FLSA, promoting consistency with tax law and potentially influencing state-level labor rules. It does not expand or restrict independent contractor tests beyond these categories.
• Constitutional Implications: None significant; the bill operates within Congress's authority to regulate interstate commerce and labor standards under the Commerce Clause of the U.S. Constitution.
• Political Implications: The bill shows bipartisan support, with sponsors from both parties (introduced by Rep. Kiley (R-CA) and Rep. Cuellar (D-TX), plus numerous co-sponsors). It reflects efforts to support flexible work arrangements in sales and real estate amid ongoing debates on gig economy and independent contractor rights, without major controversy noted in the bill text.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Kiley, Kevin [R-CA-3]

Cosponsors (31)

Rep. Cuellar, Henry [D-TX-28], Rep. Carbajal, Salud O. [D-CA-24], Rep. Van Drew, Jefferson [R-NJ-2], Rep. Fong, Vince [R-CA-20], Rep. Suozzi, Thomas R. [D-NY-3], Rep. Moore, Blake D. [R-UT-1], Rep. Bergman, Jack [R-MI-1], Rep. Moran, Nathaniel [R-TX-1], Rep. Alford, Mark [R-MO-4], Rep. Sherman, Brad [D-CA-32], Rep. Moolenaar, John R. [R-MI-2], Rep. Costa, Jim [D-CA-21], Rep. Hudson, Richard [R-NC-9], Rep. Mann, Tracey [R-KS-1], Rep. Cole, Tom [R-OK-4], Rep. Valadao, David G. [R-CA-22], Rep. McClain, Lisa C. [R-MI-9], Rep. Garcia, Robert [D-CA-42], Rep. Owens, Burgess [R-UT-4], Rep. Kim, Young [R-CA-40], Rep. Swalwell, Eric [D-CA-14], Rep. Messmer, Mark B. [R-IN-8], Rep. Scholten, Hillary J. [D-MI-3], Rep. Calvert, Ken [R-CA-41], Rep. Soto, Darren [D-FL-9], Rep. Thompson, Mike [D-CA-4], Rep. Baumgartner, Michael [R-WA-5], Rep. McGuire, John J. [R-VA-5], Rep. Crank, Jeff [R-CO-5], Rep. Finstad, Brad [R-MN-1], Rep. Harder, Josh [D-CA-9]

Recent Actions

• 2026-02-11: Placed on the Union Calendar, Calendar No. 420.
• 2026-02-11: Reported (Amended) by the Committee on Education and Workforce. H. Rept. 119-494.
• 2026-02-11: Reported (Amended) by the Committee on Education and Workforce. H. Rept. 119-494.
• 2025-09-17: Ordered to be Reported (Amended) by the Yeas and Nays: 19 - 16.
• 2025-09-17: Committee Consideration and Mark-up Session Held
• 2025-05-19: Referred to the House Committee on Education and Workforce.
• 2025-05-19: Introduced in House
• 2025-05-19: Introduced in House

Bill Versions

• Direct Seller and Real Estate Agent Harmonization Act — issued 2025-05-19 — PDF (2 pages)
• Direct Seller and Real Estate Agent Harmonization Act — issued 2026-02-11 — PDF (4 pages)