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July 26, 2021 at 10:19 AM
What You Need to Know
- In the past, some agents have asked the courts to classify them as insurance company employees.
- Many financial services professional groups are fighting the PRO Act.
- Joe Manchin is one of the 46 co-sponsors of the Senate version, S. 420.
Financial services industry groups are continuing to fight hard against the Protecting the Right to Organize (PRO) Act, even though supporters seem to be having a hard time rounding up enough support to get it through the Senate.
The PRO Act bill would change federal labor rules.
One section would expand the definition of “employee” for purposes of determining who can join a union. The section would include the financial advisors who are now classified as independent contractors in the definition of employee.
PRO Act Basics
Members of the House passed their version of the bill, H.R. 842, March 9, by a 225-206 vote.
Sen. Patty Murray, D-Wash., introduced the Senate version, S. 420, in February. That version now has 46 co-sponsors, all Democrats. One of the co-sponsors of the Senate version is Joe Manchin, a Democrat from West Virginia who is known for his independence.
However, no senator has joined as a co-sponsor since April.
But the committee Murray heads — the Senate Health, Education, Labor and Pensions Committee — held a hearing on the bill last week.
Financial services groups sent Murray and the highest-ranking Republican on the panel, Sen. Richard Burr, R-N.C., a letter asking them to change the independent contractor provision.
Professional Options
The letter said that currently financial services professionals can choose whether to be employees of insurers, broker-dealers or RIAs, or independent contractors.
Many financial services professionals who work as independent contractors have written agreements with insurers or other companies that define those individuals’ independent contractor status, the groups added.
“It would be enormously disruptive to negate these agreements through federal legislation,” the groups said. “By effectively reclassifying independent contractors as employees, the PRO Act would create unintended consequences for the industry, and specifically insurance producers and independent financial advisors.”
The number of financial services groups signed the letter. These include the American Council of Life Insurers, the American Property Casualty Insurance Association, the American Securities Association, Finseca, the Council of Insurance Agents and Brokers, the Financial Services Institute, the Independent Insurance Agents and Brokers Association of America, the Insured Retirement Institute, the National Alliance of Life Companies, the National Association for Fixed Annuities, the National Association of Health Underwriters, the National Association of Independent Life Brokerage Agencies, the National Association of Insurance and Financial Advisors, the National Association of Mutual Insurance Companies, the National Association of Professional Insurance Agents and the Securities Industry and Financial Markets Association.
