Independent Contractor Status Under the Fair Labor Standards Act
Summary
SIFMA provided comments to the Department of Labor’s (the “Department”) notice of proposed rulemaking to revise its interpretation of independent contractor status under the Fair Labor Standards Act (“FLSA”) (the “Proposal”).
We support the intended purpose of the Department’s Proposal “…to promote certainty, reduce litigation, and encourage innovation in the economy.”
Excerpt
October 26, 2020
Via Electronic Submission
Ms. Amy DeBisschop
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue, NW
Washington, DC 20210
Re: RIN1235-AA34, Independent Contractor Status Under the Fair Labor Standards Act
Dear Ms. DeBisschop:
The Securities Industry Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on the Department of Labor’s (the “Department”) notice of proposed rulemaking to revise its interpretation of independent contractor status under the Fair Labor Standards Act (“FLSA”) (the “Proposal”). We support the intended purpose of the Department’s Proposal “…to promote certainty, reduce litigation, and encourage innovation in the economy.”2
I. The Value of Independent Contractors in the Securities Industry
Independent contractors have long been an integral part of the securities industry. Independent broker-dealers (“BDs”) and the nearly 160,000 individuals that affiliate with them as independent financial advisors (“FAs”) serve millions of clients across the U.S. by providing investment education and guidance. Many clients are modest to middle income investors seeking advice on retirement planning, educational funding, and other life events. Many of these FAs offer or provide additional services to protect their clients’ financial well-being, such as insurance solutions and tax planning advice. For FAs that choose this route instead of being an employee of a BD, independent contractor status allows them to own and operate their own small business (formed as sole proprietorships, professional corporations, partnerships, LLCs, or other legal entities) and control the manner and means of its operation. Their business bears the hallmarks of an independent contractor. They benefit from a decentralized business structure, buy or rent their own office space, employ their own staff, select and manage their vendors, and are typically responsible for covering their own expenses and providing for their own retirement and health and welfare benefits.