SIFMA Statement on Department of Labor Worker Classification Proposal
Washington, DC, December 12, 2022 – SIFMA today filed a comment letter on the Department of Labor’s proposal to modify Wage and Hour Division regulations to revise its analysis for determining employee or independent contractor classification under the Fair Labors Standards Act (FLSA). The letter notes the proposal could benefit from some improvement to best serve the public interest.
“Independent contractors have long been an important part of the securities industry. Independent broker-dealers and the nearly 140,000 FINRA registered individuals that affiliate with them as independent financial advisors serve millions of clients across the U.S. with tailored investment advice,” said Kenneth E. Bentsen, Jr, SIFMA president and CEO. “Financial advisors who choose to be independent deserve the ability to remain independent. The Department’s proposal could have inadvertent adverse impact on financial advisors who take advantage of the many benefits of being independent contractors.”
The letter includes an explanation of how the securities industry independent contractors serve retirement savers and others, and provides important feedback around the following areas:
- Concern about treating all factors of an economic realities test as equal versus previous Court analysis that has highlighted as the primary factors (1) the nature and degree of the worker’s control over the work and (2) the worker’s opportunity for profit or loss;
- The public policy concern with implying that regulatory compliance can turn a worker into an employee;
- A suggestion that the Department consider the inclusion of certain written contracts as an additional factor, whether independently or in relation to control
- Concerns about the justification for rulemaking that reverses a new rule put in place less than two years ago.
SIFMA’s comment letter further expands on these views and can be found here.
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