Former Compass agents Todd and Lisa Sheppard have filed a class action lawsuit against the broker for allegedly fixing prices and making unfair commission deductions.
Compass is facing its fourth lawsuit since going public – this time over claims the broker lied over commission splitting, deductions for marketing and other expenses, and its agent-equity plans.
Former Compass team leaders Lisa Sheppard and Todd Sheppard filed a class action lawsuit in the Sonoma County Supreme Court on April 29 to appeal for violations of California labor law, according to a report from HousingWire.
“Employers like Compass are violating California labor law every day to create the impression that investors and the public are doing well financially and that market share is growing,” the complaint said.
The Sheppards, who currently work at Sotheby’s International Realty, said their contract with Compass for 2018 included a 90/10 commission split, a signing bonus, a marketing budget and office space. However, the Sheppards said that the page and a half contract did not mention several important deductions that resulted from their separation.
The duo said Compass had deducted marketing and other costs from their split and got involved in price fixing. When their team earned less than 5 percent commission on a home sale, Compass made another deduction that the duo described as “unique and unprecedented in the real estate profession.”
In addition, the Sheppards said Compass misled agents into believing their agent-equity plan would include access to common stock. “Compass did not advise plaintiffs and class members that they would receive substandard stock, not the company’s common stock,” the complaint read.
In a January statement on Compass’ agent equity program, a company spokesperson outlined the process for accessing restricted stock units, which requires agents to transfer a portion of their commission.
“The number of [restricted stock units] The award to each broker is determined by dividing the total amount of commission income that he has voluntarily contributed to the program by the price per share of the preferred shares at the time of granting, ”said the declarer. “When the company announced the plan in November 2019, that price was $ 154.27.”
“Let’s say an agent has invested $ 10,000 in Compass’ equity program. With the company’s 10 percent match, that agent would have 71 RSUs, ”he continued. “Any of these RSUs can be redeemed for one common share of Compass.”
When brokers buy shares at bargain prices, they get “additional benefits such as more cash flow protection such as preferential cash flow distribution in return for foregoing voting rights,” an industry source with first-hand knowledge of the inner workings of the IPO process, Inman said .
Sheppard’s legal team was unavailable for comment, but a Compass spokesperson made this written statement: “Compass intends to vigorously defend itself against these claims, which are wholly unfounded.”
The Sheppards aren’t the only California-based agents bringing these claims against Compass. In January, former agent Greg Maffei filed a class action lawsuit against the company for inappropriately deducting costs, fixing prices, misleading agents about its equity program, and exercising “reasonable levels of control for W-2 employees”, non-independent contractors.
“This class action lawsuit challenges Compass’s unfair, unlawful and fraudulent business practices designed to gain market share by luring top real estate agents with promises of high commissions and compensation packages that include bonuses, covered business expenses and stock options to bring them to Compass to hire “competitors” was Maffei’s complaint.
“Compass has deployed more than $ 1 billion in venture capital funding to support its” bait-and-switch “tactic and to account for the losses Compass suffered in overpaying and enticing its competitors’ real estate agents.” it added.
Compass handles a wide variety of lawsuits from agents and competitors, including Realogy, Howard Hanna, and The Agency.
In April, the agency announced that Compass had illegally prevented former Compass agent and the agency’s current president, Rainy Hake Austin, from recruiting Compass agents. That same month, Howard Hanna said Compass stole “agents and trade secrets” that led to its April 1st IPO.
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