In the News: Jim Coleman Discusses Impact of New DOL Independent Contractor Rule on Financial Advisors in Financial Planning

Following the U.S. Department of Labor’s (DOL) proposed rule to clarify who is an independent contractor under the Fair Labor Standards Act (FLSA), which could impact more than 300,000 financial advisors, Jim Coleman was quoted in an October 14, 2022, article in Financial Planning providing commentary on what the proposed rule could mean for those working in the industry.

The proposed rule released on October 11, 2022, is a replacement of the Trump administration’s rule, which the Biden administration claims put too much emphasis on how much control a person exercises over his or her work and how much they stand to profit or lose from their own activities and decisions. The Biden administration said other factors, such as the amount of skill required for a certain type of work, were downplayed in the previous rule; however, Coleman said the Trump administration’s rule, in viewing control and opportunities for profit and loss are the deciding factors in employment matters, had at least been an attempt to make it easier to know if someone could be classified as an independent contractor. "Now this new proposal is going back to the totality of the circumstances, none of which is dispositive or has more weight than the others," Coleman said. "It's going to make the outcomes more arguable. And anything that is more arguable tends to lead to more litigation."

The financial services industry has stood up to court challenges over the status of independent contractors in the past. In 2012, the U.S. District Court for the Southern District of California sided with the former financial firm Waddell & Reed in a case brought by advisors who argued they shouldn't have been deemed independent contractors and should have received a minimum wage and overtime for the hours they logged at the firm. In reaching its decision, the court noted that the advisors had signed professional career agreements stating they would be independent contractors, were paid solely by commission and were free to choose their places and hours of work.

Coleman has 40 years of experience in counseling employers on wage and hour matters, as well as defending employers in wage and hour class and collective litigation and administrative proceedings. His expertise includes in-depth knowledge of the Fair Labor Standards Act (FLSA), and many comparable state wage and hour laws. Coleman served as General Counsel for the National Council of Chain Restaurants for two decades, and through his representation of the trade association, as well as many of its member companies, he has developed significant expertise in addressing legal issues of particular concern to the restaurant and food service industry. He has also represented the chain restaurant industry before Congress in connection with legislative matters involving the FLSA and the NLRA.

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