While the proposal aims to provide clarity for employers, industry groups argue it would instead create confusion and impose new burdens on thousands of financial professionals.

The Financial Services Institute, which represents independent financial advisors and small business owners, said in its comment letter dated August 6 that the rule "would destroy the independent financial advisor model and exceed NJDOL's rulemaking authority." The group contends that independent advisors have long operated as business owners, not employees, and that the proposed changes would force many to become employees of larger firms.