DOL Releases Final Independent Contractor Rule

FSI said Tuesday that it supported the 2021 rule “because of the clarity and security it provided independent advisors regarding their independent contractor status.”

Independent financial advisors, Brown said, “are entrepreneurs who have built a strong presence in their communities, own their own businesses, pay business taxes and hire their own staff. If they are forced to be employees, this could adversely harm Main Street Americans’ access to their local trusted financial advisor.”

The rule, according to Su, “provides guidance on proper classification and seeks to combat employee misclassification, a serious problem that impacts workers’ rights to minimum wage and overtime pay, facilitates wage theft, allows some employers to undercut their law-abiding competition and hurts the economy at-large.”

The guidance provided by the final rule, Su explained, “aligns with longstanding judicial precedent on which employers have previously relied to determine a worker’s status as either an employee or independent contractor,” and “will preserve essential worker rights and provide consistency for entities covered by the Fair Labor Standards Act.”

Labor explained that the new “independent contractor” rule “restores the multifactor analysis used by courts for decades, ensuring that all relevant factors are analyzed to determine whether a worker is an employee or an independent contractor.”

It addresses six factors that guide the analysis of a worker’s relationship with an employer, Labor stated. They include:

any opportunity for profit or loss a worker might have;
the financial stake and nature of any resources a worker has invested in the work;
the degree of permanence of the work relationship;
the degree of control an employer has over the person’s work; whether the work the person does is essential to the employer’s business;
and a factor regarding the worker’s skill and initiative.