Keller Williams agreed to settle class action lawsuits over changes to its profit-share program.
The Austin-based brokerage finalized negotiations with the plaintiffs, former agents with the firm, earlier this month, according to documents filed with a federal court in Nevada and first reported by Inman.
The deal applies to all cases brought by the Humphrey, Farrington & McClain firm, though the terms of the agreement are not yet public. Last month, another lawsuit filed by Louis and Deborah Ronayne, who are represented by a different group of attorneys, was voluntarily dismissed with prejudice, which means the claims could be filed again.
A court filing indicated that the parties will file a joint request to dismiss the lawsuits by Nov. 5.
Darryl Frost, a spokesperson for Keller Williams, declined to comment on the settlement.
Former agents began suing Keller Williams for breach of contract and unjust enrichment in March, months after the brokerage voted to slash profit shares for agents who left the firm for a competitor. The plaintiffs alleged that Keller Williams anticipated agents would accuse it of violating its contract because it also added a provision to the program allowing them to use the funds for legal defense.
The franchisor amended its revenue program in February 2020 to exclude all agents who joined the firm on or after April 1, 2020, and later left for a competitor. At the time, agents who started with the company before then were still entitled to the full amounts.
But in August, Keller Williams’ leadership council voted to retroactively apply changes to its distribution policy, including reducing the amount of profit share from 100 percent to 5 percent for vested agents who joined before April 2020 and later moved to a competitor. Under the program, agents are considered vested after at least seven consecutive years with the franchisor.
“Profit share will increase for agents that continue to partner in our growth,” Marc King, then president of Keller Williams, told company leadership at the time.
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Keller Williams began sending letters to vested agents in December, notifying them of the change and allowing them six months to rejoin the firm or lose most of their profit share.
“This change will not affect agents that retire or leave the real estate brokerage business,” Frost told Inman earlier this year. “Importantly, this change does not enrich Keller Williams Realty, Inc. — these funds continue to enrich only affiliated real estate agents, investors, brokers and staff.”
Just two months after the lawsuits were filed, Keller Williams scrapped its plans to apply the change retroactively.
— Sheridan Wall