2 versions

CosmeticWhat changed in REPORTED IN HOUSEcompared with INTRODUCED IN HOUSE (May 19, 2025)

Technical corrections only. The v2 version of H.R. 3495 includes updated procedural information such as additional sponsors, a House Report number, and a Union Calendar number, reflecting its progress through the legislative process. The substantive text of the bill, including the proposed amendment to the Fair Labor Standards Act of 1938, remains identical to v1.

H.R. 3495119th CongressIntroduced May 19, 2025

Direct Seller and Real Estate Agent Harmonization Act

Reported To HouseLabor and EmploymentSubstantive

View bill text

Sponsor: Rep. Kiley, Kevin [R-CA-3]
Committees: Education and Workforce Committee (primary)
Last action: Sep 8, 2026

Bottom line

This bill codifies the independent contractor status of direct sellers and real estate agents under federal labor law, potentially impacting their wages, benefits, and working conditions while providing regulatory clarity for businesses.

What it actually does

This bill amends the Fair Labor Standards Act of 1938 (FLSA) to explicitly exclude direct sellers and qualified real estate agents from the definition of "employee." By referencing their existing definitions in the Internal Revenue Code, the bill formalizes their status as independent contractors under federal labor law. This means these workers would not be subject to FLSA protections such as minimum wage, overtime pay, and child labor laws.

Proponents argue

Supporters argue this bill provides much-needed clarity and consistency between federal tax and labor laws, reducing regulatory burdens for businesses and preserving the flexibility and entrepreneurial opportunities valued by direct sellers and real estate agents who prefer independent contractor status. They contend it prevents misclassification lawsuits and supports business models reliant on independent contractors.

Opponents contend

Critics contend that by explicitly excluding these workers from FLSA protections, the bill could strip them of fundamental labor rights, potentially leading to lower wages, lack of overtime, and absence of benefits, pushing more workers into precarious employment situations without the safety net of traditional employment. They argue it could encourage businesses to misclassify workers to avoid employer responsibilities.

The bill text is extremely short and can be read in under two minutes, allowing ample time for stakeholders to understand its direct implications.

Section 2, amending Section 3(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(e))

Clarification of "Employee" Definition for Direct Sellers and Real Estate Agents

prominently featuredstraightforward

This provision amends the Fair Labor Standards Act (FLSA) to explicitly state that the term "employee" does not include direct sellers or qualified real estate agents. It references Section 3508(b) of the Internal Revenue Code of 1986 for the definitions of these terms, which already classifies them as non-employees for federal tax purposes. This change means these workers would not be covered by FLSA provisions such as minimum wage, overtime pay, and child labor protections.

GroupImpactMechanismScale

GroupDirect Sellers (e.g., multi-level marketing participants, door-to-door salespeople)ImpactFormalizes independent contractor status under FLSA, removing minimum wage, overtime, and child labor protections.MechanismStatutory exclusion from FLSA's "employee" definition.ScaleAffects potentially millions of individuals engaged in direct sales across various industries.

GroupQualified Real Estate AgentsImpactFormalizes independent contractor status under FLSA, removing minimum wage, overtime, and child labor protections.MechanismStatutory exclusion from FLSA's "employee" definition.ScaleAffects a significant portion of the real estate workforce.

GroupBusinesses employing direct sellers or real estate agentsImpactReduces potential liability under FLSA for misclassification, clarifies compliance requirements.MechanismLegal certainty regarding worker classification.ScaleBenefits a wide range of companies, from small real estate brokerages to large direct sales organizations.

Supporters argue

Supporters argue this provision provides legal certainty for businesses and workers, preventing costly litigation over worker classification and preserving business models that rely on independent contractors. They emphasize that many direct sellers and real estate agents value the flexibility and autonomy that come with independent contractor status.

Critics contend

Opponents argue this provision could lead to exploitation by allowing companies to avoid providing basic labor protections, such as minimum wage and overtime, to workers who, in practice, may function more like employees. They contend it could exacerbate income inequality and reduce worker benefits.

Tradeoffs

The provision balances the desire for business flexibility and worker autonomy against the need for foundational labor protections. It highlights the tension between different models of work and the appropriate scope of federal labor law.

FOUND

The bill defines "direct seller" and "qualified real estate agent" by referencing section 3508(b) of the Internal Revenue Code of 1986.

Section 2, amending Section 3(e)(6) of the FLSA

Why it matters:This is standard legislative practice to avoid redundancy and ensure consistency across federal statutes. It is not intended to be evasive.

Case for: Referencing existing tax law definitions ensures consistency in worker classification across federal statutes, simplifying compliance for businesses and workers already familiar with these definitions.

Case against: A reader must consult a separate statute to fully understand the scope of the bill, potentially creating a barrier to immediate comprehension for those not well-versed in the Internal Revenue Code.

Estimated impact: The impact is on the precise scope of who is covered by the exclusion, affecting potentially millions of workers and thousands of businesses.

About this analysis. AI-Generated from the official bill text and available committee reports. Gaps in available data are noted explicitly. Verify important details with the official Congress.gov record.