The Department of Labor has announced that it will not enforce a 2024 rule for determining employee or independent contractor classification under the Fair Labor Standards Act. That rule, put in place by the Biden Administration, is now under review by the Department and also faces several federal lawsuits challenging its validity. NAIFA opposed the 2024 rule.

When the final version of the 2024 rule was released, NAIFA CEO Kevin Mayeux, CAE, said, “Many financial advisors operate locally as small business owners, employing others on their staff, and serving the members of their communities. Reclassifying them as employees rather than independent contractors could threaten the abilities of advisors to best serve their clients and to ensure that their small businesses can operate efficiently.”

While it evaluates the 2024 rule, a DOL field assistance bulletin says, the Department will determine employee or independent contractor status based on “longstanding principles outlined in Fact Sheet #13.” These principles rely on an “economic reality" test to determine a worker’s status and were clarified by a DOL rule issued by the previous Trump Administration, which NAIFA helped shape.