FSI Battles Back Against DOL Independent Contractor Rule

The Financial Services Institute and three other grade groups are asking a federal appeals court to allow an earlier lawsuit to proceed in an attempt to vacate a Department of Labor rule that makes it harder to classify workers as independent contractors.

While Acting DOL Secretary Julie Su says the new rule is needed to protect workers from exploitation, FSI, a trade group that represents the independent broker-dealer industry, and others argue that it sets standards that make it nearly impossible to classify any business owner as an independent contractor.

“The independent contractor status is vital to our members, and FSI is ready to leverage all our advocacy tools to ensure it remains protected,” said Dale Brown, FSI president and CEO.

As reported by The DI Wire, DOL released its final Independent Contractor Rule earlier this month.

FSI has joined the Associated Builders and Contractors, the Associated Builders and Contractors of Southeast Texas, and the Coalition for Workforce Innovation to ask the Fifth Circuit Court of Appeals to decide whether or not to remand the lawsuit to U.S. District Court, where additional filings and arguments will take place to determine the legality of the 2024 rule, the FSI said in a statement.

The FSI successfully sued the DOL in 2021 to force the agency to implement its Trump-era independent contractor rule. The latest rule, it said, unnecessarily threatens the livelihood of independent registered representatives.

“We fear the DOL’s final rule will undermine our financial advisor members’ independent contractor status, despite thousands of comment letters, multiple hearings and many meetings in which stakeholders, including our members, expressed their desire to remain independent,” Brown said.

The 2021 Trump-era DOL rule “gave independent financial advisors a sense of certainty that their choice to operate as independent contractors would be preserved,” Brown continued.

“Now, in light of the DOL’s new independent contractor rule, that certainty has been erased and replaced by unnecessary risk and ambiguity,” he said.

Back in the late 1990s, a predecessor organization that spawned FSI, the broker-dealer division of the International Association For Financial Planning, engaged in a lobbying effort that convinced the Internal Revenue Service that reps of independent broker-dealers paid for most of their business costs and enjoyed wide discretion in selecting the investments they recommended and sold.

Financial Services Institute advocates on behalf of independent financial advisors and independent financial services firms.

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