Tag: Labor Department

DOL Can’t Put Fiduciary Duty on IRAs, Ex-Labor Official Testifies

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2024/01/10/dol-cant-put-fiduciary-duty-on-iras-ex-labor-official-testifies/

Excerpt:

The Labor Department lacks the legal authority to promulgate its new fiduciary rule, Brad Campbell, partner at Faegre Drinker, and former head of Labor’s Employee Benefits Security Administration, told House lawmakers Wednesday.

During testimony before the House Financial Services Capital Markets Subcommittee, Campbell maintained that the department “doesn’t have the legal authority to do what it is trying to do” because it cannot impose a fiduciary duty as it relates to individual retirement accounts.

“The reason we are here today is that the Proposals go well beyond DOL’s limited authority,” Campbell told lawmakers.

Labor’s plan ”would make DOL the primary financial regulator of $26 trillion, approximately half of which is held by individuals” in IRAs rather than employer-provided plans.

If Labor’s proposals “were limited to redefining fiduciary advice within the department’s actual authority — which is to administer the fiduciary standard expressly created by Congress to regulate employee benefit plans sponsored by private sector employers under Title I of ERISA — we wouldn’t be here today,” Campbell opined.

Author(s): Melanie Waddell

Publication Date: 10 Jan 2024

Publication Site: Think Advisor

DOL: If You Were an Independent Contractor, You Probably Still Are

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2024/01/10/dol-if-you-were-an-independent-contractor-you-probably-still-are/

Excerpt:

Traditionally, many life insurance agents, brokers and advisors have preferred to operate as independent contractors to benefit from the federal income tax rules for self-employed people and to enjoy the privilege of not having a boss.

But some financial professionals have argued that they would be better off if life insurers classified them as employees. In 2009, for example, three former Northwestern Mutual Life representatives sued in a federal court in California over allegations that the company had deprived them of FLSA protections by classifying them as independent contractors.

In 2019, representatives for Uber drivers and other gig workers persuaded California lawmakers to pass Assembly Bill 5, legislation that established a broader definition of “employee” for California employers.

Federal efforts: The National Association of Insurance Commissioners and other agent and broker groups joined with the American Council of Life Insurers to oppose efforts by members of Congress to set a federal definition for employee that would be similar to the California definition.

During the administration of former President Donald Trump, the Labor Department tried to address the concerns about worker classification by adopting a new, shorter “core factors” test. Those regulations took effect in January 2021.

In October 2022, after Joe Biden became president, the department announced in a notice that it was planning to rescind and replace the new regulations because the new regulations were not fully compatible with the FLSA and conflicted with decades of court decisions based on the economic reality test.

Author(s): Allison Bell

Publication Date: 10 Jan 2024

Publication Site: Think Advisor

CPI Report Shows U.S. Inflation Eased in November

Mary Pat Campbell

Link: https://www.wsj.com/articles/us-inflation-november-2022-consumer-price-index-11670883405

Graphic:

Excerpt:

The Labor Department on Tuesday said that its consumer-price index climbed 7.1% in November from a year ago, down sharply from 7.7% in October—building on a trend of moderating price increases since June’s 9.1% peak.

Core CPI, which excludes volatile energy and food prices, rose 6% in November from a year ago, easing from a 6.3% gain in October. September’s 6.6% increase was the biggest jump since August 1982.

Author(s): Gwynn Guilford

Publication Date: 13 Dec 2022

Publication Site: WSJ