Lawsuit Claims Keller Williams Changed Profit-Sharing Program Retroactively, Slashing Vested Distributions

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A proposed class action lawsuit alleges Keller Williams Realty has unlawfully amended the terms of its profit-sharing program such that vested participants who no longer work for the company but receive distributions from the program now receive only five percent of what they are truly owed. 

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The 23-page Keller Williams lawsuit says that associates who had an anniversary date before April 1, 2020, became permanently vested in the profit-sharing program after working for Keller Williams Market Centers for three consecutive years, and, importantly, they were not required to continue working for Keller Williams to remain in the program, the suit specifies. 

However, after a so-called “profit share task force” found in 2019 that roughly $25 million to $40 million in profit-sharing distributions was paid the previous year to non-Keller Williams participants who had moved on and were directly competing with the realtor, the Keller Williams International Associate Leadership Council (IALC) convened in 2023 and amended the profit-sharing program policies and guidelines manual, the complaint shares. Ultimately, the body considered and passed amendments intended to set “higher standards for becoming vested in the Profit Share Program,” the suit says. 

In particular, the IALC replaced the phrase “would be permanently vested in the Profit Sharing Program” with “are vested in the Profit Sharing Program,” the lawsuit says. Additionally, the body amended that associates who join Keller Williams on or after April 1, 2020 must remain with the realtor for seven consecutive years to become “vested,” the lawsuit states. 

Further, removed from the profit-sharing program policies and guidelines was the caveat that there is no requirement to continue to work as an associate for Keller Williams in order to remain vested in the program, the complaint continues. 

Crucially, the changes made to the program affected certain individuals with a Keller Williams anniversary date of April 1, 2020, or earlier who are currently affiliated with a non-Keller Williams brokerage, otherwise compete with Keller Williams, or attempt to induce anyone at Keller-Williams to affiliate with a non-Keller Williams brokerage, the filing relays.

Ultimately, the changes the Keller Williams IALC made to the profit-sharing program reduced the monthly distributions of “vested competing associates” down to five percent of what they once received, the suit claims. The case contends that vested competing associates are owed the full amount they are vested as they earned this amount when they recruited sales associates to join Keller Williams. 

Importantly, the IALC, in an apparent effort to force affected profit-sharing program participants to return to work with Keller Williams, added a provision to the amended program terms that stated a competing associate could return to the company within six months of receiving notice that their program distribution was to be reduced, and have the distribution reinstated to 100 percent of the former payment, the lawsuit shares. 

The suit looks to cover all persons who participate in the Keller Williams Profit Sharing Program and meet the definition of a “vested competing associate.” 

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