Wealthmanagement.com details the potential impacts of the proposed H.R. 2474, Protecting the Right to Organize Act, and why groups like NAFA are weighing in to protect independent distribution from adverse consequences.
February 10, 2020
If the Protecting the Right to Organize Act passes the Senate, tens of thousands of advisors would no longer be classified as independent contractors.
The U.S. House of Representatives passed a bill last week that would change the independent contractor status of advisors affiliated with independent broker/dealers and insurance companies. The Protecting the Right to Organize (PRO) Act, which now goes to the Senate for a vote, would institute stricter requirements for classifying a worker as a contractor instead of an employee, an issue that industry advocacy groups have been fighting for several years.
“This broad, sweeping legislation would unnecessarily reclassify as employees tens of thousands of financial advisors who have chosen the independent model,” said Dale Brown, president and CEO of the Financial Services Institute. “Our financial advisor members are independent business owners who, because of their independent contractor status, enjoy the freedom of running their own practice and offering their clients comprehensive advice, products and services.
“We strongly urge the Senate not to take up this legislation. Instead, we encourage the Senate and the House to take up the Modern Worker Empowerment Act, which would ensure consistent use of the current common law 20 factor test across all federal law and preserve the independent contractor status of those who choose this model.”