FSI Slams Biden Independent Contractor Proposal

The financial advisor trade group calls the proposal bad policy that won’t be good for the American economy.

A new test the Department of Labor is proposing for whether a person is an employee or independent contractor is “unlawful, unpredictable and inappropriate slanted,” says the Financial Services Institute.

The FSI, a trade group representing independent advisors and broker-dealers, made the statements in a comment letter on the DOL’s proposed independent contractor classification rule. It would require that workers be considered employees, entitled to more benefits and legal protections than contractors when they are “economically dependent” on a company. It could have wide-ranging impacts on company profits and hiring, household incomes and worker quality of life.

The proposal by President Biden’s administration in October would make it more difficult for companies to treat workers as independent contractors, a change that is expected to shake up ride-hailing, delivery and other industries, including independent broker-dealers.

FSI says flatly that the DOL should not finalize the new proposal, which would rescind its 2021 rule. “By hastily jettisoning the clarifying ‘core factors’ framework of the existing regulations — adopted less than two years ago in DOL’s comprehensive rulemaking on this same topic — the proposed rule would undermine its own stated objective of regulatory clarity,” FSI says.

In particular, the FSI took issue with what would become the new test under the Fair Labor Standards Act (FSLA) to determine a worker’s classification. “That novel test would be independently unlawful, unpredictable, and inappropriately slanted toward employee classification across the board,” it said.

FSI added the new rule is “bad policy” that would impose uncertainty and costs, both on the financial services industry and on the broader American economy. “Of particular concern to FSI, the proposed rule would create significant uncertainty — and, therefore, costs — for independent financial advisors and the independent financial services firms with which they affiliate, which in turn would reduce the availability of high-quality investment advice and other financial, tax, and estate-planning services for underserved communities, including minority and rural communities,” it maintained.

Latest news

Financial Services Firms Recognized for Supporting Women

The largest third-party certifier of women-owned businesses is recognizing several financial services firms with an award.

Cetera Has Record Recruiting Year

Cetera Financial Group attracted financial advisors overseeing more than $13 billion in assets last year, up 30% from 2021.

Veterans of 2011 U.S. Debt-Ceiling Fight See Tougher Battle Ahead

A showdown is coming that threatens to throw the global economy into turmoil.

U.S. Signs Record Number for Obamacare

More than 16 million Americans signed up for 2023, a jump of more than 12% over 2022 and the highest since the ACA was signed 13 years ago.

Lisa Marie Presley’s Trust Disputed

Her mother, Priscilla Presley, wants a 2016 amendment deemed invalid that would result in Lisa Marie's daughter Riley becoming trustee.

Why Inflation Might Be Harder on Rural Clients

The problem with the U.S. inflation rate is that ignores a sizable chunk of the country — rural America, say two researchers.