FSI & Coalition Renew Litigation Against DOL on Independent Contractor Classification

On Friday, the Coalition for Workforce Innovation (CWI), Associated Builders and Contractors (ABC), Associated Builders and Contractors of Southeast Texas (ABCSETX), and the Financial Services Institute (FSI) filed a motion in the United States Circuit Court of Appeals for the Fifth Circuit requesting that it lift the stay of appeal and remand the case to the U.S. District Court for the Eastern District of Texas, Beaumont Division (District Court) so that the District Court may consider whether the U.S. Department of Labor’s final rule titled “Employee or Independent Contractor Classification Under the Fair Labor Standards Act,” published on January 10, 2024 (the “2024 Rule”), complies with the Administrative Procedure Act (APA) in its attempt to rescind and replace the current rule titled “Independent Contractor Status Under the Fair Labor Standards Act” (the “2021 Independent Contractor Rule”). Previously, in 2022, the District Court found that the Department violated the APA when it first attempted to delay, and latter attempted to withdraw the 2021 Independent Contractor Rule; the court vacated these efforts and held that the 2021 Rule has been and remains in effect since March 8, 2021.

“The 2021 independent contractor rule gave independent financial advisors a sense of certainty that their choice to operate as independent contractors would be preserved under FLSA,” stated FSI President & CEO Dale Brown. “Now, in light of the DOL’s new independent contractor rule, that certainty has been erased and replaced by unnecessary risk and ambiguity. Independent financial advisors rely on their independent contractor classification as they build their businesses within their communities, pay their own taxes and expenses, hire staff and serve the interests of their Main Street clients. It is imperative that independent advisors regain the clarity and certainty of their independent status. FSI is committed to this fight for independence.”

CWI’s Chair, Evan Armstrong, emphasized that, “the DOL’s 2024 Rule still falls short of the requirements under the APA and the federal district court’s opinion from 2022. For this reason, legal options are the most effective way to block this final rule from creating uncertainty in this area of law and undermining opportunities for independent work across the economy.” 

“The Biden administration cannot be allowed to undermine flexible work opportunities for millions of Americans who choose to work independently,” said Ben Brubeck, Associated Builders and Contractors vice president of regulatory, labor and state affairs. “It is unfortunate that the U.S. Department of Labor is replacing the commonsense 2021 final rule with an ambiguous and difficult-to-interpret standard for determining independent contractor status. Regrettably, the confusion and uncertainty resulting from the final rule will cause workers who have long been properly classified as independent contractors in the construction industry to lose opportunities for work and the freedom to choose how they work.”

The Fifth Circuit will now decide whether to remand the case to the Federal District Court where additional filings and arguments will take place to determine the legality of the 2024 rule. 

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The Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 22,000 members. Founded on the merit shop philosophy, ABC and its 68 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit us at abc.org. 

The Coalition for Workforce Innovation brings together diverse stakeholders representing technology companies, worker advocates, retail, logistics, healthcare and other service industries, to educate policymakers on the benefits of independent work and to support policy proposals that protect and empower individuals to choose nontraditional work arrangements. 

The Financial Services Institute (FSI) is the only organization advocating solely on behalf of independent financial advisors and independent financial services firms. Since 2004, through advocacy, education and public awareness, FSI has successfully promoted a more responsible regulatory environment for over 80 independent financial services firm members and their 130,000+ affiliated financial advisors – which comprise over 45% of all producing registered representatives. We effect change through involvement in FINRA governance as well as constructive engagement in the regulatory and legislative processes, working to create a healthier regulatory environment for our members so they can provide affordable, objective advice to hard-working Main Street Americans.