Excerpt:
Traditionally, many life insurance agents, brokers and advisors have preferred to operate as independent contractors to benefit from the federal income tax rules for self-employed people and to enjoy the privilege of not having a boss.
But some financial professionals have argued that they would be better off if life insurers classified them as employees. In 2009, for example, three former Northwestern Mutual Life representatives sued in a federal court in California over allegations that the company had deprived them of FLSA protections by classifying them as independent contractors.
In 2019, representatives for Uber drivers and other gig workers persuaded California lawmakers to pass Assembly Bill 5, legislation that established a broader definition of “employee” for California employers.
Federal efforts: The National Association of Insurance Commissioners and other agent and broker groups joined with the American Council of Life Insurers to oppose efforts by members of Congress to set a federal definition for employee that would be similar to the California definition.
During the administration of former President Donald Trump, the Labor Department tried to address the concerns about worker classification by adopting a new, shorter “core factors” test. Those regulations took effect in January 2021.
In October 2022, after Joe Biden became president, the department announced in a notice that it was planning to rescind and replace the new regulations because the new regulations were not fully compatible with the FLSA and conflicted with decades of court decisions based on the economic reality test.
Author(s): Allison Bell
Publication Date: 10 Jan 2024
Publication Site: Think Advisor