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Keller Williams has reached an agreement to settle a string of lawsuits filed by former agents who challenged the company’s past plans to cut its profit sharing program, according to a court entry filed on Friday.
Numerous former agents have filed proposed class-action lawsuits in recent months over the company’s scrapped plans to slash its profit sharing for agents who jumped ship and worked for a competitor.
Several of those lawsuits were nearly identical, and some sought to block the company from making profit share distributions until the courts weighed in on the matter.
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On Friday, attorneys for one of the plaintiffs informed the United States District Court of Maine they had reached an agreement to settle the case with Keller Williams, and that the settlement would be completed within the next 30 days.
The filing was made in a case filed in May by James McFarlane, a Keller Williams agent who was an associate broker with the franchisor from 2004 to 2018.
McFarlane, like other former brokers and agents suing the company, moved to block Keller Williams from making changes to its profit sharing program retroactive. The company had temporarily sought to apply the changes to agents who left before 2020.
“The Profit Sharing Program was developed to be a way to reward those associates who helped build the company,” McFarlane wrote in his complaint. “The Profit Sharing Program was designed to be an open-ended profit sharing program that allowed Keller Williams associates, investors, Team Leaders, Market Center staff, Keller Williams staff, and Regional Directors to participate in profits they helped to create without assuming any financial risk.”
Keller Williams spokesman Darryl Frost confirmed the agreement to settle most — but not all — of the lawsuits.
“The McFarlane case, as with the other cases brought by the same law firm, challenged certain profit-share program revisions that were never implemented,” Frost said. “The matters have been amicably resolved and settled.”
Keller Williams agreed to settle lawsuits that were filed within weeks of each other by plaintiffs who were represented by the Missouri law firm Humphrey, Farrington & McClain. Those cases include:
- Jerri Moulder
- Michael Devlin
- Eric Mendoza
- Jana and Dennis Caudill
- Penny Alper
- Paul Davis
- Edward Fordyce
- Kevin Ortiz
- Robert Hill
Attorneys for the plaintiffs and Keller Williams must complete the settlement within 30 days.
Keller Williams began making changes to its profit sharing recruitment tool in 2020, when it announced that associates who joined Keller Williams on or after April 1, 2020 and then jumped to a competitor would no longer receive profit shares from the company’s lifelong revenue program.
In August 2023, the company moved to make that policy retroactive. The company’s leadership council voted to lower the profit share for agents who joined Keller Williams before April 1, 2020 and jump to a competitor from 100 percent to 5 percent.
The planned change appeared to be an attempt to get the defectors to return to Keller Williams, as it would have given agents affected by the policy six months to return.
In March, impacted agents began filing their class-action lawsuits, and within weeks Keller Williams abandoned its plans to make the changes retroactive.
Instead of the changes, Keller Williams moved in May to maintain its current policy, which allows agents who joined the company before April 1, 2020, to collect 100 percent of their profit share amount even if they leave the firm to work for a competing brokerage.
Vested agents are those who join KW and remain affiliated for seven consecutive years. Such agents who don’t actively compete with KW will not be affected. The company defines “actively compete” as when an agent disassociates from a Keller Williams brokerage and joins a non-KW brokerage or induces an associate to affiliate with a non-KW brokerage.
Frost confirmed on Wednesday that this remains the company’s latest version of its profit sharing program.
