H.R. 3495: Direct Seller and Real Estate Agent Harmonization Act
Sponsor
Kevin Kiley
Republican · CA-3
Bill Progress
Latest Action · Feb 11, 2026
Placed on House floor schedule, Calendar No. 420.
Why it matters
It could reshape pay and protections for millions who work as direct sellers or real estate agents.
H.R. 3495 updates the definition of 'employee' in the Fair Labor Standards Act, making it clear that direct sellers and qualified real estate agents aren’t covered by traditional labor protections like minimum wage and overtime. That means companies wouldn’t have to treat them as employees for federal labor law purposes—they'd be more like independent contractors. This would align labor law with how these workers are already treated under tax law, eliminating confusion and possible lawsuits.
The bill references IRS Code Section 3508 to define 'direct sellers' and 'qualified real estate agents.' This brings clarity for businesses worried about legal risks when classifying workers, but also removes access to federal wage-and-hour protections for a sizeable workforce.
Supporters—often industry groups—say the bill protects flexible work and prevents lawsuits. Critics argue it could leave workers with lower pay, fewer protections, and little recourse if abused by companies. The move reflects bigger national debates around the gig economy and the future of work.
What does H.R. 3495 do?
Clear exclusion from 'employee' status
Direct sellers and real estate agents are explicitly not considered 'employees' under the main federal labor law.
Link to Internal Revenue Code
Uses the IRS’s definitions to determine who counts as a direct seller or real estate agent.
Updates Fair Labor Standards Act
Amends a major longstanding law to clarify who is and isn't protected.
Reduces legal uncertainty
Aims to prevent lawsuits over worker classification by making the rules clearer.
Applies nationally
Sets a federal standard, overriding state confusion or differing laws.
Who benefits from H.R. 3495?
Direct sellers
Gain clearer status as independent contractors, avoiding disputes with companies.
Real estate agents
Stay outside federal employee rules, maintaining flexible work arrangements.
Brokerages and direct selling companies
Face less legal risk and potential cost from misclassification claims.
Industry groups
Achieve a long-sought goal to codify preferred worker classifications.
Who is affected by H.R. 3495?
Direct sellers and real estate agents
Would lose access to things like minimum wage and overtime pay from federal law.
New workers entering these fields
May have less clarity on their rights and protections if they expected employee-status benefits.
Worker advocacy and labor organizations
Face new challenges protecting gig and independent workers.
State labor agencies
May need to adjust enforcement when federal rules are clearer or override state law.
H.R. 3495 Common Questions
Can real estate agents lose federal minimum wage and overtime under HR 3495?
Yes. Under the Direct Seller and Real Estate Agent Harmonization Act (SEC. 2), qualified real estate agents would be excluded from the Fair Labor Standards Act's definition of "employee," so FLSA minimum wage and overtime rules would not apply.
Does HR 3495 make direct sellers independent contractors under federal labor law?
It excludes direct sellers from being "employees" under the Fair Labor Standards Act, according to HR 3495 SEC. 2. The bill does this by adding direct sellers to the FLSA exclusions and using the tax-law definition in IRC 3508(b).
Which workers are excluded from employee status in the Direct Seller and Real Estate Agent Harmonization Act?
The bill excludes two groups: direct sellers and qualified real estate agents. That's stated in the Direct Seller and Real Estate Agent Harmonization Act (SEC. 2).
What are qualified real estate agents under HR 3495 based on?
Under HR 3495 SEC. 2, "qualified real estate agent" is defined by reference to Section 3508(b) of the Internal Revenue Code of 1986 rather than a new standalone labor-law definition.
What are direct sellers under HR 3495 based on?
According to HR 3495 SEC. 2, the term "direct seller" comes from Section 3508(b) of the Internal Revenue Code of 1986. The bill imports that existing tax-law definition into the FLSA.
Does HR 3495 amend the Fair Labor Standards Act definition of employee?
Yes. HR 3495 SEC. 2 amends Section 3(e) of the Fair Labor Standards Act of 1938, 29 U.S.C. 203(e), to add a new paragraph excluding direct sellers and qualified real estate agents.
Can companies avoid FLSA employee classification lawsuits for real estate agents under HR 3495?
The bill is designed to make classification clearer by expressly excluding qualified real estate agents from FLSA employee status, according to HR 3495 SEC. 2. That could reduce disputes over whether they are covered employees under federal wage-and-hour law.
Does HR 3495 apply to businesses that use direct sellers?
Yes. Under HR 3495 SEC. 2, entities using direct sellers would no longer treat those workers as FLSA "employees" if they meet the IRC 3508(b) definition incorporated by the bill.
Is the worker test in HR 3495 tied to the IRS tax code?
Yes. The Direct Seller and Real Estate Agent Harmonization Act (SEC. 2) ties both covered categories—direct sellers and qualified real estate agents—to Section 3508(b) of the Internal Revenue Code of 1986.
How does HR 3495 change 29 U.S.C. 203(e)?
According to HR 3495 SEC. 2, it inserts a new paragraph (6) into FLSA Section 3(e) so that direct sellers and qualified real estate agents are not treated as "employees" under that law.
Based on H.R. 3495 bill text
HR3495 Legislative Journey
House: Committee Action
Feb 11, 2026
Reported (Amended) by the Committee on Education and Workforce. H. Rept. 119-494.
House: Vote: 19-16
Sep 17, 2025
Ordered to be Reported (Amended) by the Yeas and Nays: 19 - 16.
House: Committee Action
May 19, 2025
Referred to the House Committee on Education and Workforce.
About the Sponsor
Kevin Kiley
Republican, California's 3rd congressional district · 3 years in Congress
Committees: Education and Workforce, the Judiciary, Transportation and Infrastructure
View full profile →
Cosponsors (31)
This bill has 31 cosponsors: 11 Democrats, 20 Republicans, reflecting bipartisan support. Cosponsors represent 16 states: California, Colorado, Florida, and 13 more.
Henry Cuellar
Democrat · TX
Salud Carbajal
Democrat · CA
Jefferson Van Drew
Republican · NJ
Vince Fong
Republican · CA
Thomas Suozzi
Democrat · NY
Blake Moore
Republican · UT
Jack Bergman
Republican · MI
Nathaniel Moran
Republican · TX
Mark Alford
Republican · MO
Brad Sherman
Democrat · CA
John Moolenaar
Republican · MI
Jim Costa
Democrat · CA
Committee Sponsors
Education and Workforce Committee
4 of 36 committee members cosponsored
17 Republicans across this committee haven't cosponsored yet. Mobilize their constituents
What laws does H.R. 3495 change?
1 changes
Sections Amended
Section 3(e) of Fair Labor Standards Act of 1938 (29 U.S.C. 203(e))
inserting after paragraph (5) the following: ``(6) The term `employee' does not include any direct seller or qualified real estate agent (as such terms are defined in section 3508(b) of the Internal Revenue Code of 1986)
H.R. 3495 Quick Facts
- Committee
- Education and Workforce
- Chamber
- House
- Policy
- Labor and Employment
- Introduced
- May 19, 2025
Placed on House floor schedule, Calendar No. 420.
Feb 11, 2026
Constituent Resources
Official Sources
Official bill page with full text, cosponsors, actions, and committee referrals for the Direct Seller and Real Estate Agent Harmonization Act.
The reported (amended) text showing the exact language that adds paragraph (6) to FLSA Section 3(e), excluding direct sellers and qualified real estate agents from employee status.
House Education and Workforce Committee report accompanying the bill, documenting the committee's rationale, markup vote (19-16), and legislative history.
The current statutory text of FLSA Section 3(e) defining 'employee' — the exact provision this bill amends by adding a new exclusion paragraph.
The Internal Revenue Code section that defines 'direct seller' and 'qualified real estate agent' — the bill imports these tax-law definitions into federal labor law.
IRS guidance explaining how direct sellers and licensed real estate agents are currently treated as statutory nonemployees for federal tax purposes — the existing tax classification this bill extends to labor law.
Department of Labor overview of the Fair Labor Standards Act, the federal law governing minimum wage and overtime that this bill amends to exclude direct sellers and real estate agents.
Department of Labor fact sheet explaining which workers are covered under the FLSA — the coverage framework that would be narrowed by this bill's new exclusions.
H.R. 3495 Bill Text
“To amend the Fair Labor Standards Act of 1938 to clarify the definition of employee as it relates to direct sellers and real estate agents, and for other purposes.”
Source: U.S. Government Publishing Office
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