14 Apr, 2024
2 mins read

Industry must persuade DOL to protect independent-contractor advisers

Financial industry trade groups face a big challenge in their efforts to protect the status of brokers and insurance agents who operate as independent contractors – a Department of Labor that’s determined to make more workers employees of firms.

The DOL today published in the Federal Register a proposed rule that would make it more difficult for employers to designate workers as independent contractors. in an announcement earlier this weekLabor Secretary Mary Wash said the regulation is designed to combat the misclassification of employees as independent contractors, which “deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”

Companies that would be most directly impacted are those who use so-called “gig workers,” such as Uber and Lyft. But the proposal could also affect financial professionals who operate as independent broker-dealers and independent insurance agents.

“Our biggest issue is ensuring that Main Street investors have access to financial advice from independent producers by preserving the option for them to remain independent,” said Michael Hedge, director of government relations at the National Association of Insurance and Financial Advisors.

Dozens of groups like NAIFA will file comment letters before the Nov. 28 deadlines for public input on the proposal. But their ability to persuade the DOL to modify the rule could be limited.

“My instinct would be that we would look for a carve out for financial professionals,” Hedge said. He acknowledged that would be tough to achieve in the rule.

DOL wants “to move forward with this,” Hedge said. “I don’t see them taking their foot off the gas.”

Jim Coleman, a partner at Constangy Brooks Smith & Prophete, doubts DOL will make distinctions between different professions.

“I would imagine the Biden DOL would not be comfortable with having different rules for

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