FSI Files Suit After DOL Withdraws Independent Contractor Rule
From the Desk of Jim Eccleston at Eccleston Law LLC:
The Financial Services Institute (FSI) has filed a lawsuit against the Department of Labor (DOL) for revoking its final independent contractor rule.
Implementation of the rule was delayed in March, which prompted the Coalition for Workforce Innovation, Associated Builders and Contractors of Southeast Texas, and Associate Builders and Contractors Inc. to file suit against the DOL. The DOL announced the independent contractor rule in January and that it was set to become effective in March; however, the DOL delayed the effective date until May 7 and proceeded to withdraw the rule on May 6. The rule in question clarified the standard for employee versus independent contractor under the Fair Labor Standards Act as well as the “economic reality” test to determine whether an individual works for him or herself (independent contractor) or is economically dependent on an employer for work (FLSA employee).
After filing an amended complaint to join the lawsuit, FSI President and CEO Dale Brown explained that the DOL’s “hasty and arbitrary delay and subsequent withdrawal of its well-reasoned independent contractor rule puts it in violation of the Administrative Procedures Act”, and that the rule “must be restored so that independent financial advisors and other independent workers can operate confidently knowing their independent contractor status is secure.”
Nevertheless, the DOL announced that the rule was revoked in part because it was in conflict with the FLSA’s text and purpose as well as applicable judicial precedent. DOL Secretary Marty Walsh followed up with a statement, “By withdrawing the Independent Contractor Rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect.”
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.
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