The real estate industry is known for its fast-paced, dynamic nature and high-stakes transactions. Amidst the hustle and bustle of buying, selling, and managing properties, human resources (HR) professionals in this field face unique challenges that demand strict compliance with labour laws and ethical practices. From handling independent contractor relationships to ensuring adherence to federal and provincial regulations, management and HR departments in real estate must be well-versed in legal considerations to protect both the business and its employees.

Recruitment and retention

Many people believe that recruitment and retention in the world of real estate is proprietary to the industry. As a result, they are hesitant to entrust this task to anyone, often setting themselves up for unnecessary work, unsuccessful results and future legal troubles.

While there are specific nuances to keep in mind when recruiting agents or support staff into your business, the principles of recruitment are actually not that different from other industries:

• Having a strong employee value proposition (and agent value proposition)
• Having a consistent interview process
• Knowing which questions you can and cannot ask
• Having a contract ready for signing
• On-boarding plan and 30, 60, 90 days KPIs

Retention is also not a concept specific to the industry. All businesses are fighting the battle to keep their know-how in-house, retail top performers and have a solid succession plan in case someone leaves. Making sure your top performers are happy and supported comes down to leadership; asking questions about what you can do better to make their experience more meaningful and lucrative will reduce unnecessary turnover in both agents and employees.

Compliance with labour laws

Real estate brokerages and teams employ a diverse workforce consisting of sub-contractors, property managers, financial managers, administrative staff, and support personnel. Ensuring compliance with labour laws, such as minimum wage regulations, overtime, and working hours, is crucial.

To address this, broker/owners, team leaders and office managers must keep abreast of ever-changing labour laws and establish clear policies and procedures to guarantee adherence. Regular training sessions and communication with employees are essential to foster a culture of compliance within the organization. Having a well-defined employee handbook and hiring an employment lawyer to review HR practices can provide an extra layer of protection and guidance.

Handling independent contractor relationships

In the real estate industry, independent contractors, such as real estate agents, are a common part of the workforce. However, classifying workers accurately as employees or independent contractors is critical to avoid legal disputes and penalties. Misclassifying employees as independent contractors can also lead to wage and hour violations, tax issues, and potential legal battles.

There are strict guidelines provided by the CRA that discuss the main differences between an employee vs a contractor that should be adhered to at all times to avoid being blind-sided by prorated charges for expenses like CPP ( Canadian Pension Plan), EI (employment insurance) and vacation pay owed to name a few. In essence – if you have control over someone’s hours of work, the equipment on which they work, and the work is done continuously (not on a project basis), and the work relationship is exclusive — they are, for all intents and purposes, your employees.

HR departments must work closely with legal counsel to distinguish between employees and independent contractors based on specific criteria defined by relevant laws. Real estate businesses can mitigate potential risks by conducting periodic audits of contractor relationships and ensuring compliance with classification standards.

Handling confidential and sensitive information

Real estate transactions involve a significant amount of sensitive information, such as financial data, personal identification, and legal documents. Employee files and their security are equally as important as keeping client data safe. Management should implement strict data security measures to safeguard this confidential information from breaches or unauthorized access.

Establishing secure IT systems, conducting regular security audits, and educating employees and members of management with access to personnel information about data protection best practices are essential steps in mitigating the risk of data breaches. Owners, managers and HR should collaborate in order to develop comprehensive data protection policies that align with industry standards and comply with relevant data privacy laws.

Handling conflicts and disputes

While a misalignment between a brokerage and an agent usually results in said agent simply moving their practice to a different brand or starting their own, a conflict between internal team members or disagreement between the terms of employment between the business and one of the employees can have long and extremely negative effects of the team.

Having a well-trained management team or an external HR partner that can navigate and investigate the causes of conflict, find appropriate solutions for both parties to part ways amicably and, more importantly, stop it from impacting the rest of the business is a crucial part of preserving the reputation of your employer brand.

By prioritizing legal considerations, HR departments can build a strong foundation for a compliant, ethical, and thriving workforce in the fast-paced world of real estate. Regular training, collaboration with legal experts, and staying updated on regulatory changes are vital components of a successful HR strategy in this dynamic industry.