The PRO Act’s Unintended Impact
Last month, the U.S. House of Representatives passed the Protecting the Right to Organize (PRO) Act largely along party lines. This expansive bill would reform current labor law in a variety of areas, including a big change that would directly impact the life insurance industry.
The PRO Act would amend the National Labor Relations Act by adding language that expands the definition of “independent contractor” by adopting an “ABC” test to define who is an “employee.” This would impact hundreds of thousands of independent broker dealers (IBDs) and independent financial advisors (IFAs).
The bill, aimed at ensuring workers have adequate benefits and bargaining rights through their employer, misses the mark for the insurance industry. IBDs and IFAs prefer and enjoy the flexibility and autonomy that comes with their work. Many times, the nature of the work is why financial professionals select their profession.
According to the National Association of Insurance and Financial Advisors (NAIFA), 94 percent of financial professionals did not want to be treated as an employee for union organizing. Additionally, 95 percent were currently operating as an independent contractor and wanted to remain as such.
Limiting the ability for IBDs and IFAs to do their jobs by changing their employment status not only affects the professional, but directly impacts consumers.
These individuals are vital to ensuring consumers have access to the important financial benefits that the insurance industry provides to millions of Americans. They also are intimately familiar with the consumers that they serve. These financial professionals are ingrained in their communities, understand the needs of their neighbors and are able to offer personally tailored solutions to ensure financial stability.
While the path for the PRO Act remains unclear in the U.S. Senate, President Biden has urged its passage as part of his American Jobs Plan. As lawmakers consider options to reform and protect workers in America, it’s critical that they consider exempting financial services professionals from the PRO Act in order to ensure the financial security of millions of Americans.
(Diane Boyle is the senior vice president of government relations for the National Association of Insurance and Financial Advisors. Her responsibilities include the development and implementation of legislative and regulatory strategy, and daily execution of association activities to provide advocacy services for insurance and financial professionals to support a private, competitive insurance marketplace.)