The DOL and the Law of Unintended Consequences


If it seems we’ve been talking about the Department of Labor’s Independent Contractor Rule for years, it’s because we have. It was January of 2021 when the DOL first considered revising the standard for determining whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA). On January 10, 2024, the DOL released its final rule. The legal wrangling began immediately. Well, technically, it resumed. The DOL’s intent (which includes protecting workers’ rights when it comes to minimum wage and overtime pay) is reasonable. However, as with many legislative actions, unintended and far-reaching consequences make the rule untenable for constituencies that include independent financial advisors and broker-dealers. What are the consequences for the financial services industry? The rule’s negative impacts have been covered in depth elsewhere: potentially increasing the cost of advice for Main Street investors and compromising a financial advisor’s ability to control how [...]