KW hit with $250M lawsuit over profit sharing reductions
A former Keller Williams agent argues that the brokerage doesn’t have the right to retroactively alter the program — and now 4 more cases have been filed.
Key points:
- KW announced last summer that it was significantly reducing the profit share for agents who compete against the brokerage.
- In a complaint, a former KW agent argued that the company can’t make retroactive changes to the policy. The changes are scheduled to take effect July 1.
- Following the original complaint filed on Mar. 22, four additional agents have filed their own lawsuits.
- In a statement, KW said the funds will not go to the company, but to agents, investors, brokers and staff.
In August, Keller Williams announced a major change to its profit sharing plan for former agents — and some of those agents are now fighting back in court.
Former KW agent Jerri Moulder 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.
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 complaint filed in the U.S. District Court's Western District of Texas, Moulder's attorneys 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.
KW now facing its own set of copycat lawsuits
Since the Moulder filing on March 22, the cases have quickly multiplied, and at least four other cases have been filed by the same Missouri law firm — Humphrey, Farrington & McClain.
Additional lawsuits filed:
Former KW agent Edward Fordyce filed a complaint in Pennsylvania on March 29
Former KW agent Kevin Ortiz filed in U.S. District Court in Colorado March 26
Former KW agent Robert E. Hill filed in U.S. District Court in Kansas March 25
Former KW agent David Bueker filed in the Eastern District of Missouri March 23
Moulder left Keller Williams in December 2011 as a vested associate and is now a broker associate with Platinum Realty in Kansas City, Missouri.
Fordyce was a KW sales associate from 2009-2015 and again from 2019-2020, later joining eXp. Ortiz left KW in January 2024 and is now an eXp agent in Englewood, Colorado; Hill left KW in 2013 and is a sales associate with Platinum Realty, while Bueker left in 2011 and is currently a sales associate with Red Key Realty Leaders in Chesterfield, Missouri, according to court documents.
Keller Williams Spokesman Darryl Frost said the 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.
According to the Moulder filing, the class is expected to include more than 100 people who meet the definition of being a part of the program under the policy as of Feb. 1.
Kenneth McClain, an attorney for Moulder, told the San Antonio Express-News that the entire situation is unfair to the agents who are about to see their profit share greatly reduced.
"We just don't think, legally or equitably, that they have a right to go out and change a contract without the approval of these agents. And none of these agents approved of this," McClain said in the article, published online March 25.
In making the announcement last August, then-president Marc King said the change in policy was made to further support "those who continue to grow and journey with us." King recently stepped down from the president position but continues to work for KW as a Franchise Systems Orientation leader.