The House of Representatives 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 that allows them 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% receive income reported on a 1099.
- 94% do not want to be treated as an employee for union organizing.
- 95% 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.
NAIFA’s Government Relations Team will provide an update on the PRO Act on March 23 during NAIFA’s Business Performance Center Impact Week. Registration is open online.
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