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March 16, 2022 at 01:45 PM
What You Need to Know
- The decision is a victory for FSI, which represents independent advisors.
- Labor's delay and withdrawal of the rule violated the Administrative Procedure Act, the judge ruled.
- The independent contractor rule is effective as of March 8, 2021, the rule’s original effective date.
In a victory for the Financial Services Institute, the U.S. District Court for the Eastern District of Texas has ruled that the Labor Department’s delay and withdrawal of its independent contractor rule violated the Administrative Procedure Act.
With the decision, the independent contractor rule is effective as of March 8, 2021, the rule’s original effective date.
“The court appropriately ruled that the DOL’s independent contractor withdrawal did not follow administrative procedure,” Dale Brown, president and CEO of FSI, said in a statement. “Restoring the DOL’s independent contractor rule provides clarity and certainty for independent financial advisors and independent financial services firms. Our members can now operate their businesses and serve their Main Street clients confidently knowing that their choice to be independent is secure under FLSA.”
The rule clarifies a long-standing “economic reality test” to determine whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA).
