House panel pushes repeal of DOL independent contractor rule

Committee votes 21-13 to undo the contentious DOL regulation, paving the way for the measure to be considered by the full House.

A House committee has advanced a resolution to repeal a contentious Biden administration rule that sets stricter criteria for businesses classifying workers as independent contractors rather than employees.

The House Committee on Education and Workforce passed the measure Thursday on a 21-13 vote, paving the way for a full House consideration, Reuters reported.

The legislation, initially introduced in the Senate by Sen. Bill Cassidy, R-La., challenges a Department of Labor rule implemented March 11 that has been met with opposition from various industries that rely on freelance and contract labor, including independent financial advisors.

The DOL rule introduces a comprehensive six-factor test for determining worker status, focusing on elements such as the degree of company control over the worker and the job’s permanence. This approach aims to replace a prior regulation under the Trump administration, which emphasized control and the worker’s profit or loss potential as the primary criteria for classification.

But according to opponents, it creates a fog of uncertainty for workers and professionals who want to operate as independent contractors. That was the crux of a lawsuit filed earlier this month by a coalition of associations that included the Financial Services Institute.

“Independent financial advisors choose to be independent so that they can operate their own businesses and better serve their clients,” Dale Brown, president and CEO of FSI, said in a statement at the time. “Our members should not have to risk losing their independent contractor status because, for example, they are complying with federal and state securities rules.”

Despite its potential passage through Congress, the House measure to repeal the rule faces a steep hurdle in avoiding a veto from President Joe Biden, with Republicans unlikely to secure the two-thirds majority required for such an override.

The push for repeal has garnered support from various quarters, including the National Association of Insurance and Financial Advisors.

In an emailed statement, NAIFA CEO Kevin Mayeux hailed the committee’s decision as a positive step toward “[removing] the ambiguity and unpredictability resulting from the final rule” and “[preserving] the ability of our members to choose to operate as independent contractors.”

“The majority of NAIFA’s members – insurance producers, broker dealer representatives, and/or independent registered investment advisors – are independent contractors who help generate economic growth and financial security to the local communities they serve across the nation,” Mayeux said.