Keller Williams settles lawsuits involving scrapped changes to profit-sharing program

The nightmare created by Keller Williams’ decision to make changes to its profit-sharing program appears to be coming to a close.

On Friday, Keller Williams and plaintiffs Eric Mendoza and Jack LeVine filed a document with a U.S. district court in Nevada. On Oct. 2, the parties stated that they “finalized the terms of the settlement agreement for this and the other pending claims against Defendant in cases involving plaintiffs represented by the Humphrey, Farrington & McClain firm.”

The plaintiffs and cases represented by Humphrey, Farrington & McClain include Jerri Moulder, Michael Devlin, Eric Mendoza and Jack LeVine, Jana and Dennis Caudill, Penny Alper, Paul Davis, Edward Fordyce, Kevin Ortiz and Robert Hill.

The filing notes that the plaintiffs’ counsel is currently “gathering the signed releases from clients in those various cases,” and that they plan to file a join stipulation of dismissal by Nov. 5, 2024.

The news comes after James McFarlane filed notice last month that he had settled his lawsuit with the brokerage. McFarlane was also represented by attorneys from Humphrey, Farrington & McClain.

In total, more than a dozen lawsuits were filed against Keller Williams by former agents. The suits began piling up after the firm announced in August 2023 that it was cutting its profit-share distribution for vested “former” KW agents — those who joined the company before April 1, 2020, and left for another brokerage — from 100% to 5%. Prior to this change, vested “former” agents benefited from a 100% profit-share distribution even after their departure. 

The changes had been slated to go into effect in July 2024. But in May, the brokerage announced that its International Association Leadership Council (IALC) had made the decision to rescind the changes.

Agents join the profit-sharing program by designating a sponsor when they join a market center. That sponsor then becomes part of the agent’s “profit share tree.”

Once the agent has begun contributing to the market center’s business by closing transactions, they “receive a portion of the market center’s profits, which will be attributed to the associates in their tree.” Keller Williams also allows associated to designate a beneficiary to receive their profit-share distributions upon their death.

In July, the firm announced that its market centers had shared more than $2 billion in profits with affiliated agents though its profit-sharing program, which was first established in 1987. From the start of 2023 through mid-2024 alone, Keller Williams said that its market centers awarded more than $148 million in profits to associates.

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