The Labor Department released Tuesday its final independent contractor rule that defines whether a worker is an employee or independent contractor under the Fair Labor Standards Act. The Financial Services Institute warns that the rule could threaten advisors' status as independent contractors.
"Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections," acting Labor Secretary Julie Su said Tuesday in a statement. "This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they've earned."
Dale Brown, president and CEO of the Financial Services Institute, said Tuesday in a statement that while FSI continues "to analyze and review the rule, FSI remains committed to preserving independent financial advisors' ability to choose to operate as independent contractors."
FSI, Brown continued, fears "the DOL's final rule will undermine our financial advisor members' independent contractor status, despite thousands of comment letters, multiple hearings and many meetings in which stakeholders, including our members, expressed their desire to remain independent."
Labor sent its final independent contractor rule to the Office of Management and Budget for review in early October. FSI has been a staunch critic of Labor's new rule, which replaces Labor's 2021 rule.
The notice on OMB's website stated that the DOL "continues to believe that the 2021 IC Rule does not fully comport with the FLSA's text and purpose as interpreted by courts and has proposed to rescind the 2021 IC rule and set forth an analysis for determining employee or independent contractor status under the Act that is more consistent with existing judicial precedent and the Department's longstanding guidance prior to the 2021 IC rule."
