What You Need to Know
- FSI says the delay and withdrawal of the rule violates the Administrative Procedures Act.
- The rule provided independent advisors with certainty regarding their classification status.
- FSI says rule must be restored.
The Financial Services Institute filed a lawsuit late Thursday against the Labor Department for withdrawing its final independent contractor rule.
Labor repealed the rule on May 6, one day before its delayed effective date.
“The DOL’s independent contractor rule codified the long-standing ‘economic reality’ test for determining worker classification,” Dale Brown, FSI’s president and CEO, said Friday in a statement. “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.”
A complaint was filed in March by the Coalition for Workforce Innovation, Associated Builders and Contractors of Southeast Texas, and Associated Builders and Contractors Inc., challenging the rule’s delay.
Labor issued its final independent contractor rule on Jan. 6, and it was set to become effective on March 7. Labor then delayed the effective date until May 7, and issued the withdrawal on May 6.
FSI joined those groups Thursday in filing an amended complaint challenging the rule’s withdrawal.
“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,” Brown said. “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.”