The Department of Labor has proposed a new rule meant to change the employment status of independent contractors, which may affect financial advisors, particularly those working with independent broker-dealers.
The goal of the proposed rule is to cause more individuals, now classified as independent contractors, as employees under the Fair Labor Standards Act (FLSA).
The Department of Labor claims that the proposed rule would align the department's approach with how courts have interpreted the FLSA and the "economic reality" test, including whether a potential employee's work is "integral" to the employer's business. The rule would restore a "totality-of-the-circumstances" analysis to determine whether a worker qualifies for employee status under FLSA.
The Financial Services Institute (FSI)is reviewing the current proposal, including whether it allows advisors the ability to remain independent contractors if they so desire, according to WealthManagement.com.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
