Civil and criminal enforcement
The US Department of Labor (DOL) has published its Fiscal Year 2020 “Fact Sheet” documenting the criminal and civil enforcement activities of its Employee Benefits Security Administration (EBSA) under the Employee Retirement Income Security Act of 1974 as amended (ERISA). Total monetary recoveries increased for the fifth year in a row, due to another year of historically high recoveries from EBSA’s civil enforcement actions. Civil enforcement recoveries reached a historic high, but the number of criminal investigations and civil investigations both decreased in FY 2020, continuing a trend but likely affected by the COVID-19 pandemic.
Criminal investigations remain high
In FY 2020, DOL, working in conjunction with the Department of Justice, closed 230 total criminal investigations, slightly behind the rolling 15-year average. While representing a minor decrease from FY 2019 (probably due to COVID-19 related restrictions) FY 2020 saw a continuation of heightened criminal investigation efforts since DOL’s 2009 announcement that it would emphasize enforcement of the criminal provisions applicable to ERISA plans.
The rate of criminal investigations closed with guilty pleas or convictions decreased from FY 2019. In FY 2020, 59 criminal investigations were closed with guilty pleas or convictions—down from FY 2019’s total of 80—representing the second year in a row where there was a decrease in the rate of results when compared to the increased total number of investigations closed, which is slightly lower than the average annual fluctuation in the rate of results over the last 15 fiscal years.
Civil investigations continue to decrease
In FY 2020, the total number of civil investigations closed, as well as the number of civil investigations closed with results, decreased for a sixth consecutive year. DOL closed a total of 1,122 civil investigations—the lowest number since FY 2001—and of those, 754 were closed with results.
Despite the continued decline in civil enforcement investigation activity since FY 2014, FY 2020 held steady in the rate of results in relation to the total number of civil investigations closed.
Monetary results increased
The total monetary results for all EBSA enforcement and compliance activities continued to increase since FY 2015’s historic low.
In FY 2020, EBSA reported total monetary recoveries of approximately $3.12 billion, an increase of $550 million over FY 2019. While a smaller increase than there was from 2018 to 2019, the 21% increase is well above the average annual fluctuation of approximately 11%. And for the third year in a row, that amount is higher than the rolling 15-year average for total monetary recoveries of $1.41 billion.
Sustained impact of the Informal Complaint Resolution System
Recoveries from the Informal Complaint Resolution System decreased over FY 2019. Recoveries from Prohibited Transactions Corrected and Plan Assets Protected almost doubled those in FY 2019. While the $181,000,000 in recoveries was a significant increase, that figure is still dramatically lower than the rolling 15-year average for such recoveries.
In terms of total monetary results, recoveries from the Informal Complaint Resolution System represented approximately 15% of the total recoveries for FY 2020, which was a slight drop from 20% in FY 2019. This FY 2020 figure is less than the 15-year average of approximately 26%, and it represents a decreased share of total recoveries for the seventh year in a row. In addition, Recoveries from Prohibited Transactions Corrected and Plan Assets Protected increased slightly to approximately 5.8% of the total monetary recoveries for FY 2020, which is the second lowest amount in almost two decades, and is less than one sixth of the average for the past 15 years. In a continuing departure from the historically inverse relationship between the informal complaint resolution system and the investigation of prohibited transactions, the trend of recoveries from the informal complaint resolution system gradually replacing recoveries from the prohibited transaction investigations appears to have gone beyond merely reversing itself and instead taken a large stride in the opposite direction—as was the case in FY 2019, FY 2020 recoveries from the informal complaint resolution system substantially outweighed recoveries from prohibited transaction investigations in terms of the total monetary recoveries.
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