This week, ADISA provided detailed comments to the Department of Labor’s Division of Regulations, Legislation and Interpretation regarding its proposal to modify Wage and Hour Division regulations to revise its analysis for determining employee or independent contractor classification under the Fair Labor Standards Act.

ADISA believes that the Division should reevaluate the applicability of the Proposal to broker-dealers, registered investment advisers, registered representatives and financial advisers.

Persons who are currently categorized as independent contractors by broker-dealers and registered investment advisers function independently and effectively support their own business endeavors with the compensation received from their positions. This independence is built into the financial models that their firms employ, models that are based on the assumption that independent contractors will bear significant costs of their business operations and operate with significant freedom relative to the firms with whom they are associated. The Proposal has the potential to dramatically impact this carefully calibrated and mutually advantageous model.

In the letter, ADISA expands on how the Proposal will upend the decades long independent broker-dealer and registered investment adviser business model, and restates that the Proposal should either be reverted back to its prior form or financial services professionals should be exempted from its application.

The letter was signed by ADISA’s Legislative & Regulatory Committee Co-Chairs John Grady, ABR Dynamic Funds, and Catherine Bowman, The Bowman Law Firm, who along with Deborah Froling, Kutak Rock, and Mike Bendix, DFPG Investments, drafted the letter.