Lawsuits over KW profit-sharing changes continue to multiply 

Changes to Keller Williams' profit-sharing program are getting more pushback, in the form of lawsuits from ex-agents.

At least seven different complaints have been filed in different U.S. District courts across the country. The string of cases began last month with former KW agent Jerri Moulder, who filed a class action lawsuit against the Austin-based brokerage giant seeking $250 million in damages in response to profit sharing reductions scheduled to take effect on July 1.

Since the initial complaint, filed in the Western District of Texas, at least six other cases have been filed around the country by the same Missouri law firm — Humphrey, Farrington & McClain. Real Estate News has reached out to the law firm seeking comment.

Additional lawsuits have been filed by former KW agents including:

• Penny Alper, in the Southern District of New York on April 3

• Paul Davis, in Arizona on April 2

• Edward Fordyce, in Pennsylvania on March 29

• Kevin Ortiz, in U.S. District Court in Colorado on March 26

• Robert E. Hill, in U.S. District Court in Kansas on March 25

• David Bueker, in the Eastern District of Missouri on March 23

Why is this happening? The changes announced last summer affect agents who left KW to join a competing firm. Those agents would see their profit share distribution reduced from 100% to 5%.

Former agents who had retired or left the industry altogether would retain the full profit share. An incentive was also put in place for former agents: If they returned to KW within six months of the effective reduction date, they would have their profit share restored to 100%.

In the court filings, which are generally similar in scope, attorneys for the former KW agents argued that changes to the profit-sharing program cannot be made retroactively.

"The profit sharing program was developed to be a way to reward those associates who helped build the company," according to court documents, which also noted that the KW guidelines manual did not include the right to amend any aspect of the program's method for calculating the distribution amount.

What KW is saying: Keller Williams spokesman Darryl Frost said the company's International Associate Leadership Council voted to update the policy. According to the company, the manual allows for policy proposals to be submitted for a vote at IALC meetings.

"Importantly, this change does not enrich Keller Williams Realty, Inc. — these funds continue to enrich only affiliated real estate agents, investors, brokers, and staff," Frost said.