A bicameral GOP resolution to block the Department of Labor’s (DOL’s) now-final worker classification rule has been introduced. Votes on it in both the House and Senate are expected later this month.
The resolution, a mechanism that requires both expedited action and a simple majority vote (i.e., 51 rather than 60 in the Senate), is available under the Congressional Review Act (CRA). This CRA resolution was introduced on March 6 by Sen. Bill Cassidy (R-LA) in the Senate and by Rep. Kevin Kiley (R-CA) in the House.
The DOL worker classification regulation, which took effect March 11, states that a worker’s status as an employee or an independent contractor will be determined by an “economic reality” test. Economic reality will be determined on a facts-and-circumstances basis that will assess a worker’s economic dependence on the entity for which the worker is performing work. Six specific factors will be used in doing this analysis. All will be given equal weight in making a final determination. The six factors—each of which is discussed in detail in the final rule—include control exerted by the entity for which the work is performed (or by the worker doing the work), the opportunity for the worker to experience profit or loss, the worker’s investment in the business, the permanency (which factor includes exclusivity) of the work-hired vs. work-performed, and the skill and initiative demonstrated by the worker.
The rule does not contain industry-specific carve-outs, but most financial services companies (including insurers) say they believe their insurance and financial advisors’ worker classification status will not be impacted by the new rule. NAIFA members should check with their carriers and broker-dealers to be sure of their current status.
Prospects: While it is entirely possible that there are enough votes in both the House and Senate to block the now-final worker classification rule, it is unlikely the effort will succeed. Even if Congress passes the blocking resolution, President Biden is sure to veto it. And at this juncture it does not look like there are enough votes to override a veto.
NAIFA Staff Contacts: Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org, or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.