GOP Spending Bill Keeps DOL Indie Contractor Rule Alive

News July 25, 2023 at 09:41 PM
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The Senate Appropriations Committee plans to mark up Thursday the House GOP's Labor, Health and Human Services, Education and Related Agencies bill, which contains a provision ensuring the Labor Department's new independent contractor rule stays intact.

The bill's Independent Contractor rider "would require that no funds be used to block" the rule, published in the final days of the Trump administration, according to Public Citizen, an advocacy group.

The bill language states: "No Federal funds may be made available to alter or affect the administration, implementation, or enforcement" of the final rule entitled ''Independent Contractor Status Under the Fair Labor Standards Act,'' passed on Jan. 7, 2021.

That rule, according to Public Citizen, "made it easier for employers to misclassify workers as independent contractors, removing them from minimum wage and other labor protections."

Labor released last October a proposed rule that would replace the existing 2021 test under the Fair Labor Standards Act used to determine worker classification as either an independent contractor or an employee.

The rule, if finalized, would cause "independent financial advisors and firms to divert time and resources to defending their independent contractor classification," the Financial Services Institute said at the time.

Public Citizen says the appropriations rider would also include any attempts to block the rule still being finalized by Labor designed to "replace the previous one with clearer protections from misclassification for workers."

Labor's most recent regulatory agenda lists the final rule as coming in August.

Dale Brown, FSI's president and CEO, said in January that Labor's new independent contractor rule shows DOL doesn't "understand the independent advisor model and gig economy workers — these are professionals that own their own businesses, own their own practices. They chose to be independent."

Brown said Labor's new independent contractor rule "is a big step backwards," and remains "a major issue" for FSI. "We have engaged that fight and it will continue."

On Monday in an email, an FSI spokesperson reiterated that the 2021 independent contractor rule "provides workers and businesses, particularly the independent financial services industry, with the much needed clarity regarding workers' classification."

The pending new Labor rule "would create uncertainty regarding many financial advisors' independent contractor status, impose burdensome costs on independent financial services firms and, ultimately, impact Main Street Americans' access to affordable, professional financial advice," FSI said. "Our financial advisor members have chosen to be independent contractors, with many having switched from an employee-based model, and we support efforts that protect advisors' ability to make that choice."

Sens. Bill Cassidy, R-La., ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, along with Tim Scott, R-S.C., and John Thune, R-S.D., introduced in April the Employee Rights Act of 2023, which they say would protect independent contractors and clarify the definition of "employee."

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