FSI Challenges DOL Independent Contractor Rule Withdrawal

Late yesterday, the Financial Services Institute (FSI) joined in filing an amended complaint against the Department of Labor (DOL), challenging the delay and withdrawal of the Department’s final independent contractor rule. The DOL repealed the rule on May 6, 2021, one day before its delayed effective date.

FSI President & CEO Dale Brown issued the following statement following the filing:

“The DOL’s independent contractor rule codified the long-standing ‘economic reality’ test for determining worker classification. It provided our independent financial advisor members with much-needed certainty regarding their classification status, only for it to be arbitrarily revoked shortly before going into effect.

“Independent financial advisors choose to be independent contractors – many of them voluntarily switching from an employee advisor model – so that they can operate their own business and better serve their clients. Inspired by the entrepreneurial spirit, independent advisors build their businesses within their communities, develop their own books of business, pay their own taxes, hire their own staff and rely on their business’ success.

“The independent contractor rule established consistency and uniformity in worker classification. Our members relied upon it for assurance that their choice to be independent contractors would be preserved. The rule’s withdrawal will result in the return to the confusing and conflicting interpretations previously applied by differing courts, causing our members and other properly classified independent contractors to divert time and resources to defending their independent contractor classification from unnecessary challenges.

“The DOL’s hasty and arbitrary delay and subsequent withdrawal of its well-reasoned independent contractor rule puts it in violation of the Administrative Procedures Act. The rule must be restored so that independent financial advisors and other independent workers can operate confidently knowing their independent contractor status is secure.”

FSI joined the Associated Builders and Contractors, Inc. (ABC); the Associated Builders and Contractors of Southeast Texas (ABCSETX); and the Coalition for Workforce Innovation (CWI) in filing the amended complaint in the U.S. District Court for the Eastern District of Texas. Click here to read the full complaint.

In March, ABC, ABCSETX and CWI filed an initial complaint challenging the delay of the independent contractor rule.