Generic risks, we have seen, are risks that attach to doing business regardless of the business being done. Insurance, it has been suggested, is the first line of defense against generic business risks. General information about managing generic business risk with appropriate insurance is available from the Small Business Association here.

Most brokerages are employers for the purposes of state law even though the individual agents are, for the most part, independent contractors. That is the case because most brokerages employ unlicensed office personnel. Being an employer creates generic risks because of the myriad of responsibilities placed on employers in this and every other state. Mitigating such risk is a matter of knowing and following the rules. Fortunately, much of the information needed is available on-line.

Every Oregon employer should have a copy of “The Employer’s Guide for Doing Business in Oregon.” This state government publication is available hereSpecific up-to-date information for employers is available from the Department of Labor and Industries (BOLI) here. BOLI rules cover everything from wage and hour regulations to civil rights, family leave and hiring and firing requirements.

In addition to BOLI requirements, all workplaces are subject to safety and health regulations under Occupational Safety and Health Administration (OSHA) standards. These laws are arcane and often hard to apply to real estate activities. For instance, beginning January 1, 2009, employers with ten (10) or more employees will be required to have a safety committee or conduct safety meetings. All employers in Oregon, regardless of the number of employees, will be required to have a safety committee or conduct safety meetings by September 19, 2009. These requirements are set out in rule in OAR 437-001-0765 A copy of the rule is available hereOregon OSHA’s “Quick Guide to Safety Committees and Safety Meetings” can be found here. General information about Oregon OSHA can be found at:

State employment regulations and requirements aside, every real estate company should have an office policy manual that spells out how the company will conduct its business. In real estate, such a manual will cover everything from floor time to agency relationships to record keeping to malpractice insurance. A good office policy manual is the cornerstone of generic risk management. Office policy manuals are so important to risk management that the Oregon Association of REALTORS® has developed a comprehensive model manual to guide Oregon brokers through the process of developing good office policies. Click here to view or download a copy of the Model Office Policy Guide.

Office policies must take into account the fact that real estate agents are typically independent contractors. Independent contractors are not employees and cannot, without increasing risk, be treated as such. Because most of the relationships are with independent contractors, managing a real estate office is more about managing contractual relationships than employer/employee relationships. Such management starts with a written independent contractor agreement between the company and each agent. No real estate agent should ever practice real estate under another broker’s license as an independent contractor without a written independent contractor agreement.

Independent contractor agreements control the scope of the relationship between agent and brokerage. The allocation of risk through insurance, the duties imposed on both sides and the all important financial arrangements between agent and company are contained in a good independent contractor agreement. Such contracts spell out how relationships will be terminated, pending sales completed and commissions divided. It is through independent contractor agreements (and incorporated office policies) that the brokerage controls the activities of its agents and therefore controls its generic risk.

Furthermore, the law mandates that when there are multiple principal brokers in a single company, that each principal broker complete a Principal Broker Divided Control & Supervision Agreement. Due to the responsibility of principal brokers to review the real estate activities of brokers in their office, when there are multiple principal brokers in a single company, responsibilities can quickly become disorganized. Such situations lend themselves to unintentional errors and items falling through the cracks in the fast paced world of real estate transactions. As a result, a divided supervision and control agreement is required to be completed by each principal broker in a company. The agreements are set in place to provide a clear delineation of responsibilities for review of real estate activities and ensure sufficient oversight and control within a company. Additionally, the agreements provide guidance in the event of a principal broker disassociating from a company and requiring agreements to be amended to ensure sufficient supervision and control. These statutorily required agreements are critical to ensure sufficient supervision of real estate activities in a company and to account for the sometimes unforeseen circumstances, such as disassociation. Click Here for a sample form agreement.

Independent contractor agreements and office policies are also how a brokerage controls the generic business risk created by federal, state and local discrimination laws. Office policies and contracts should expressly state the brokerage’s commitment to nondiscrimination. They should also contain relevant special policies that set out procedures for reporting and resolving discrimination issues. Here, for instance, is the nondiscrimination provision found in the Association’s Model Office Policy Guide.


It is the strict policy of Broker that all professional real estate services and activities conducted under Broker’s, or his authorized designee’s, supervision be provided equally and fairly to all members of the public without regard to sex, race, color, religion, disability, familial status, national origin, sexual orientation, marital status, sources of income, age or ancestry. As independent real estate professionals, all Associates are expected to know and abide by all state, federal and local laws and regulations prohibiting discrimination. No unlawful discrimination by Associates of any kind will be tolerated, nor shall any Associate be a party to any plan by others to unlawfully discriminate. To assist Associates in meeting their responsibility to avoid sexual discrimination in the work place, a copy of Broker’s sexual harassment policy is attached to this Manual.

Broker will not discriminate against Associates, or other office personnel, in any manner inconsistent with state, federal or local law. Broker shall provide reasonable accommodation to disabled individuals otherwise qualified for employment or association with Broker unless such accommodation would impose an undue hardship. All Associates and office personnel shall report immediately to Broker, or Associate’s principal broker, any violation of this nondiscrimination policy.

Notice the nondiscrimination policy covers both risk created by agents dealing with others and risk created by the brokerage dealing with agents. The brokerage is, to some extent, insulated from its agents’ actions if those actions are contrary to the express policy of the brokerage. At the same time, the policies help the brokerage with the risk created by the brokerage interacting with its own agents. For instance, the brokerage’s risk of a sexual discrimination claim by an agent or employee against the brokerage can be mitigated by having a separate sexual discrimination policy that outlines reporting and resolution procedures.

Discrimination by agents is also a Fair Housing issue. The risk to the brokerage created by the Fair Housing Act is mitigated at the outset by having a clear nondiscrimination policy communicated to all agents. That is why nondiscrimination provisions are found in office policies and independent contractor agreements. More information on Fair Housing laws and requirement can found in the Fair Housing section of this Toolkit. The National Association of REALTORS® maintains a library of Fair Housing information for its members here.
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