NAIFA Trustee Dennis Cuccinelli of NAIFA-New Jersey testified before the New Jersey Department of Labor and Workforce Development to voice concerns over a proposed rule that would codify the ABC test for determining worker classification.
“While we support efforts to prevent worker misclassification, this rule would significantly narrow current standards and could disrupt the personalized financial services we provide to New Jersey families,” Cuccinelli said.
The proposed rule would reclassify many licensed insurance agents and financial advisors as employees rather than maintaining their status as independent contractors. Cuccinelli warned that this shift would not only impact professionals but also limit access to vital financial products. “New Jersey families rely on us for access to a variety of financial protection solutions, including life insurance and annuities. These products are not just numbers on a policy, they are lifelines in times of crisis.”
Life insurers in New Jersey pay out approximately $8.5 billion in life insurance and annuity benefits annually. Limiting the flexibility of agents, “risks eroding this safety net by narrowing the options available to families,” he said.
Cuccinelli urged the Department to follow California’s example where regulators amended similar legislation to protect the independent status of financial professionals. “New Jersey should follow their lead and amend this proposal to reflect the distinctive needs of our profession,” he said.
Cuccinelli also cited a NAIFA survey that showed 95% of NAIFA members currently classified as independent contractors want to keep their status. Under the proposed rule, many advisors would fail Prong B simply because they provide services that fall within the “usual course of business” of the companies they contract with," risking disruption to the independent agency model.
“We are not employees. We are entrepreneurs. Our independent contractor designation provides a level of flexibility that simply wouldn’t be possible if we were re-classified as full-time employees.”
On behalf of NAIFA-New Jersey, Cuccinelli called for an exemption for licensed professionals, concluding that “granting [employee] protections to us would not only hurt us but those we serve.”
See complete testimony.
