DOL ERISA Enforcement Remains Robust, but Will New OMB Memo Ease the Burden from DOL Investigations?

Morgan Lewis - ML Benefits

Morgan Lewis - ML BenefitsThe US Department of Labor (DOL) released its 2020 statistics on ERISA enforcement activities on October 27, affirming that the agency’s investigations remain robust. In sharing the statistics, the DOL not only boasted that it had restored $3.1 billion to employee benefit plans, participants, and beneficiaries, but also that this amount is the “most ever” that the agency has recovered in one year. The DOL further emphasized its active enforcement program by pointing out that its investigatory recoveries increased 175% from fiscal year 2017 to 2020, and 310% from fiscal year 2016 to 2020. The DOL reports that these results were obtained through 1,122 civil investigations, with 67% of such cases resulting in monetary recoveries or other corrective actions

These numbers, and the reported growth, are consistent with the trends we have observed. Over the last few years, the DOL’s ERISA enforcement activities have been extremely active. In the retirement space, the DOL has been especially focused on missing participant investigations and most recently, ESG investigations. With respect to group health plans, the DOL has been increasingly active, focusing on compliance with the Affordable Care Act and the Mental Health Parity Act, and recently on CARES Act compliance.

Because of these activities, ERISA plans, fiduciaries, and service providers should expect that the DOL will continue to be active in conducting ERISA investigations.

However, there could be some relief related to DOL investigations. As discussed in more detail in this Morgan Lewis All Things FinReg blog post, the Office of Management and Budget (OMB) recently issued a memorandum

The memorandum was issued to implement the May 19, 2020 Executive Order on Regulatory Relief to Support Economic Recovery, which, among other things, had directed agencies to revise their procedures in light of “the principles of fairness in administrative enforcement and adjudication.” As outlined in the All Things FinReg post, the OMB memorandum could potentially enhance the protections afforded to parties under investigation. The memorandum specifically addresses—and may offer some relief for investigatory subjects—around burden of proof, agency notices, information about the investigation, and administrative proceedings.

If you are currently under investigation by the DOL, the memorandum might signal a change in approach by the DOL—and an easing of the burden of DOL investigations—or alternatively might be a resource to challenge overzealous DOL activities.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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