Advocacy in action blog

The U.S. Department of Labor released its newly proposed independent contractor rule to determine whether workers are employees or independent contractors under the Fair Labor Standards Act (FLSA). The proposed rule, when finalized, will replace the 2024 federal rule on independent contractor classification.

NAIFA CEO Kevin Mayeux, CAE, issued the following statement:

“NAIFA is encouraged by the Department of Labor’s release of a new rule to replace the existing 2024 federal rule on independent contractor classification. The 2024 Rule fails to provide an analysis for distinguishing between independent contractors and employees under the FLSA that is sufficiently clear and leads to predictable outcomes. The 2024 Rule’s description of several economic reality factors could be viewed as setting a higher bar to find independent contractor status than required under the law. Among other harms, an analysis which is ambiguous or perceived as too restrictive of independent contracting can deter businesses from engaging with bona fide independent contractors or induce them to unnecessarily classify such individuals as employees.

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 would have threated their ability to best serve their clients and to ensure that their small businesses can operate efficiently.

NAIFA is currently reviewing the proposed rule to determine the full impact on independent contractors and will remain diligent to ensure that NAIFA members are best positioned to maintain their independent business operations and to best serve their clients. 

We have previously provided extensive comments and testimony to the DOL on the topic of preserving independent contractors’ rights and we now look forward to working with the department as it works to improve policies that support the independence of NAIFA members and the ability of consumers to receive professional financial guidance.”

The Department of Labor’s fiduciary-only rule will not go into effect. NAIFA has strongly opposed the misguided regulation, which would have restricted consumer choice and access to retirement advice. NAIFA was similarly instrumental in defeating an earlier version of the rule in 2016.

NAIFA CEO Kevin Mayeux, CAE, issued the following statement on the Department of Labor’s announcement that it will rescind the federal rule on independent contractor classification:

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.

The Wall Street Journal and Washington Post recently published articles casting a negative light on the lawsuit brought by NAIFA, ACLI, and others to stop the Department of Labor’s misguided fiduciary-only rule. These articles mischaracterize what we hope to achieve and largely ignore the arguments laid out in our court filings.

NAIFA along with the American Council of Life Insurers and other advocacy partners recently notched a major win in our lawsuit opposing the Department of Labor’s fiduciary-only rule. As we shared with you last week, the U.S. District Court for the Northern District of Texas granted a stay in the lawsuit that prevents the DOL rule from going into effect September 23.

The U.S. District Court for the Northern District of Texas has granted a request by NAIFA, ACLI, several NAIFA chapters, and other advocacy partners to stay the Department of Labor's fiduciary-only rule, stating that our case is "virtually certain to succeed on the merits." The action follows a similar stay issued Thursday by a different federal court in a similar case.

On July 25, 2024, a federal court in the Eastern District of Texas issued a stay barring the enforcement of the DOL fiduciary-only rule (and amendments to PTE 84-24) while the case in FACC v. DOL is pending. An appeal of the stay to the 5th Circuit is likely.  

Meanwhile, NAIFA’s challenge to the fiduciary-only rule, brought with ACLI and other industry groups, is under review in the Northern District of Texas, where we seek a preliminary injunction and stay against enforcement of the fiduciary-only rule and amendments to PTE 84-24 and 2020-02.

Washington, D.C.—The American Council of Life Insurers (ACLI), National Association of Insurance and Financial Advisors (NAIFA), Finseca, Insured Retirement Institute (IRI) and National Association for Fixed Annuities (NAFA) issued the following statement on legislation advanced today by the U.S. House Appropriations Subcommittee on Labor, HHS, Education, and Related Agencies that would block funding for the Labor Department’s fiduciary-only regulation:

Nine insurance trade associations filed a lawsuit today against the U.S. Department of Labor (DOL) to overturn a regulation limiting consumers' choice of financial professional and their access to retirement products that deliver protected lifetime income.

The American Council of Life Insurers (ACLI), National Association of Insurance and Financial Advisors (NAIFA), NAIFA-Texas, NAIFA-Dallas, NAIFA-Fort Worth, NAIFA-POET, Finseca, Insured Retirement Institute (IRI), and National Association for Fixed Annuities (NAFA) issued the following comments on their challenge to the DOL's harmful intervention in the retirement savings marketplace and its one-size-fits-all fiduciary standard obligation on effectively every financial professional who sells retirement products: