The Labor Department's Employee Benefits Security Administration, which writes retirement policy, "will not regulate through enforcement whenever possible," and will require senior management to approve significant enforcement actions, Daniel Aronowitz, EBSA's chief, states in a just-released enforcement policy.
Field Assistance Bulletin 2026-01, released Tuesday, is meant to "clarify" EBSA's enforcement priorities, according to Aronowitz. "Whenever possible and consistent with our mission, EBSA must not regulate through enforcement activities, or use enforcement to drive policy. Instead, we should use notice-and-comment rulemaking and sub-regulatory guidance," he states.
EBSA lists four priorities :
- Focusing enforcement on the most egregious conduct and significant harm;
- Ensuring, whenever possible and consistent with our mission, that EBSA does not regulate by enforcement and instead promotes fairness, prior notice, and clarity to the regulated community;
- Requiring proper review by senior agency officials of all critical enforcement initiatives; and
- Committing to timely and responsive enforcement.
While such dispatches are not uncommon, "this particular bulletin is concerning to me because of its political, rather than policy-based, tone," Lisa Gomez, former EBSA head, told ThinkAdvisor Wednesday in an email.
"The references to environmental, social and governance considerations, 'regulation by enforcement,' and the requirements to seemingly have much in the enforcement area approved by the Administration worries me as far as what influence there may be on specific cases and priorities," Gomez said.
'Highest Priority'
EBSA's "highest priority," Aronowitz states, "will be to target individuals and entities who, acting in bad faith, improperly administer plan benefits or misappropriate (or, aid in the misappropriation of) assets set aside for the benefit of the American worker. This includes conduct designed to enrich themselves or other goals unrelated to participants' best interests, such as the promotion of environmental, social, or governance objectives."
EBSA will continue to enforce the duties of loyalty and prudence under ERISA, the bulletin states.
"Nevertheless, a significant percentage of our enforcement resources must be focused on enforcement of loyalty breaches, or direct evidence of non-exempt prohibited transactions that involve impermissible conflicts of interest," the bulletin states. "While breaches of the duty of prudence can and do threaten the security of the American worker's promised benefits, the costliest breaches of the duty of prudence tend to be accompanied by concomitant loyalty breaches. To the extent any enforcement activity is solely based on a prudence breach, and given that ERISA is a law of process and not results, EBSA must avoid cases that unfairly second-guess process-based fiduciary judgments."
Fred Reish, of counsel with the Ferenczy Benefits Law Center, told ThinkAdvisor Wednesday in an email that he agrees "that criminal violations and breaches of the duty of loyalty are appropriate priorities and where the largest losses often occur."
Regulation by Enforcement
As to "providing guidance before enforcing the law, I think it is aspirational," Reish said. "While the private sector often complains of 'regulation through enforcement,' my experience is that, in many cases the meaning of the law is fairly obvious and the real complaint is that the government did not specifically say that it was going to enforce that particular law before initiating enforcement."
While it would be helpful for the EBSA to make clear its priorities, Reish continued, "I don't think that necessarily means that it shouldn't enforce the law where detailed guidance hasn't been provided. On the other hand, where the law is vague, the EBSA can help with voluntary compliance by providing more detailed guidance on its interpretation of the law."
Having senior EBSA management approve significant enforcement actions, however, "could devolve into micromanagement," Reish opined. "That could slow down enforcement and be discouraging to the investigators in the field. I hope that doesn't happen, but I can see the potential."
"While I understand that EBSA has limited resources, we cannot forget that so many of EBSA's enforcement activity comes from individual participant complaints," Gomez said. "Workers and their families need to be able to rely upon the agency whose mission it is to protect their job-based retirement and health benefits, and not feel that their individual needs have been deprioritized by this Administration. Time will tell how this plays out in practice."
Investigation Time Limits
Routine investigations involving less complicated issues should be completed within 18 months, "unless there are exigent circumstances that are communicated to the Director of Enforcement," Aronowitz states.
Reish notes that this is the first effort by EBSA "to publicly put time limits on investigations."
Aronowitz noted that "investigated parties and Congress have expressed concerns that some EBSA investigations are open-ended and unduly continue for extended periods of time."
More complex investigations, meanwhile, "must be completed within 30 months unless there are exigent circumstances," the bulletin states.
"Retirement plan sponsors and fiduciaries often complain about investigations that go on for years," Reish said. "That takes time and money away from those businesses, and some of them are fairly small companies, so the cost can be significant for them. In my view, if a plan sponsor is cooperative and provides information to the DOL on a timely basis, the investigation should not take more than 12 months."
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