The Big “I" opposes the Protecting the Right to Organize Act in its current form and is working to seek an exemption from the ABC test for insurance agents and financial advisors.
This week, the U.S. House of Representatives passed H.R. 842, the “Protecting the Right to Organize (PRO) Act," 225-206 on a mostly party-line vote. The Big “I" had previously joined a number of other business organizations in sending Congress a letter opposing the legislation.
The PRO Act would drastically change the nation's labor laws and includes a provision that could significantly impact the independent agency system. Among other things, the legislation seeks to change the definition of “independent contractor" in a way that could cause significant disruption to the financial services and property-casualty insurance markets, including independent insurance agents and the consumers they serve.
Specifically, the legislation incorporates the “ABC" test by requiring workers classified as independent contractors to (A) be “free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;" (B) perform service “outside the usual course of the business of the employer;" and (C) be “customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed."
By effectively reclassifying many independent contractors as employees, the PRO Act would create unintended consequences for insurance producers, independent broker-dealers and independent financial advisors. The PRO Act's “ABC test" could eliminate the choice a majority of practitioners have made to serve clients independently. In turn, that could drastically reduce clients' ability to access high quality advice for their insurance, investment and retirement security needs.
While the Big “I" opposes this legislation in its current form, we are also working with a broad coalition in the financial services and insurance industries to seek an exemption from the ABC test for insurance agents and financial advisors.
The legislation now heads to the Senate where significant negotiations would likely be needed in order for this legislation to garner the bipartisan support that would be necessary for the legislation to pass the Senate's 60-vote threshold.
As this legislation makes its way through Congress, we will continue to provide members with updates in the weekly News & Views e-newsletter.
Wyatt Stewart is Big “I" assistant vice president of federal government affairs.