The House of Representatives has passed the Protecting the Right to Organize (PRO) Act (H.R. 842), a sweeping piece of labor legislation. Among its provisions, the PRO Act as passed by the House would reclassify many insurance and financial professionals as “employees” rather than “independent contractors” under federal labor law. NAIFA argues that such a reclassification will disrupt insurance and financial services business models and limit consumer access to diverse offerings of products, services, and advice.
“Insurance and financial advisors have a long history of successfully working as independent contractors with insurance carriers and financial firms to serve the financial services needs of consumers,” said NAIFA CEO Kevin Mayeux. “Issues with contract workers the PRO Act is supposed to address do not exist in the insurance and financial services industry, which is already highly regulated. Reclassifying agents and advisors as employees would in many cases stifle their independence to provide clients with diverse options, complicate their tax filing status, and disrupt their business models and relationships with clients. Many agents and advisors have relationships with multiple insurance companies and financial institutions, which could make reclassifying them as ‘employees’ problematic. The current independent-contractor relationship ensures consumers have the greatest access to products, services, and advice.”
NAIFA members are professionals who generally operate their own small businesses. An ongoing survey of members indicates that they oppose attempts to reclassify them as employees. Early results indicate:
- Approximately 90 percent receive income reported on a 1099.
- 94 percent do not want to be treated as an employee for union organizing.
- 95 percent operating as an independent contractor want to remain so.
The top concerns of members should they be reclassified as employees include:
- Loss of business deductions.
- Loss of ability to set one’s own schedule.
- Loss of renewal income if current clients were reassigned.
- Nullification of existing agent contracts.
- Diminished product offerings due to inability to offer products outside of a primary carrier.
The PRO Act will now go to the Senate for consideration. NAIFA will continue working with lawmakers to protect the independent-contractor status of agents and advisors.
Additional Resources from the Advocacy in Action blog:
- Advocacy in Action Blog Post: Worker Classification Under Scrutiny
- NAIFA CEO Signs Letter Seeking Changes to the PRO Act
The National Association of Insurance and Financial Advisors is the preeminent membership association for the multigenerational community of financial professionals in the United States. NAIFA members subscribe to a strong Code of Ethics and represent a full spectrum of financial services practice specialties. They work with families and businesses to help Americans improve financial literacy and achieve financial security. NAIFA provides producers a national community for advocacy, education and networking along with awards, publications and leadership opportunities to allow NAIFA members to differentiate themselves in the marketplace. NAIFA has 53 state and territorial chapters and 35 large metropolitan local chapters. NAIFA members in every congressional district advocate on behalf of producers and consumers at the state, interstate and federal levels.