A shortage of staff by EBSA could mean less enforcement activity. On the other hand, it could mean errors and delay. If the EBSA is still tasked with investigating, a small budget and a handful of overworked investigators may mean investigations last longer and those investigated have to do more of the heavy lifting when it comes to whittling down requests.
It seems like nearly every day, if not every hour, an update pings into our mailboxes concerning changes at the Department of Labor. In the past, when an administration has changed, we have profiled new cabinet members and appointees to help plan sponsors learn how new leaders may change regulatory priorities. Yet, there have been so many changes in the last 60 days that it can be hard to keep up.
We think that instead of taking changes as single item issues it might be more useful to see how all the changes interact. Often, legislators and regulators want changes to interact like a puzzle; each piece interlocks forming a larger picture. But sometimes when many policies are changed at the same time, conflicts emerge that can put those who are supposed to be following them into the proverbial spot between a rock and a hard place. By noting these changes, and their potential areas of conflict, we hope plan sponsors can identify where they may want to assess and address potential weak areas for risk management.
First, the largest change at the Department of Labor, of course, is the new cabinet Secretary. President Trump nominated former Representative Lori Chavez-DeRemer to be the Secretary of Labor. She has a more pro-labor position than other Labor Secretaries have had. That may be due to her father, a former Teamster.[1] For example, she opposed right to work laws usually championed by conservatives.[2] She has also sponsored some legislation making it easier to unionize. She has also co-sponsored bills on transparency around health care costs and to extend health care benefits to more workers.
When it comes to retirement policy, less is known. She has been quiet on the DOL’s fiduciary rule yet voted against DOL’s ESG rule promoted by the previous administration. That could present problems for plan sponsors if separate groups within her administration either do not agree or do not consult each other. President Trump tapped Daniel Aronowitz for the lead at the Employee Benefits Security Administration (EBSA). He graduated from Ohio State University and Vanderbilt University Law School.[3] He has written and spoken often about what he deems “frivolous lawsuits” concerning plan fees.
Before his appointment, he led an insurance company that protected plan sponsors from participant lawsuits. “In a 2024 blog post, Aronowitz complained about ‘frivolous’ litigation filed on behalf of benefit plan participants, saying that enforcing employee protections should be the job of government regulators, not trial lawyers.”[4]
It seems as though Chavez-DeRemer and Aronowitz would both agree with dismantling the DOL’s previous ESG rule. But it is not as clear as to what could happen to the fiduciary rule. This is partially due to the termination of EBSA employees, the exact number still unknown. It is also unclear as to whether the DOL’s ERISA Advisory Council has been disbanded as part of Trump’s request to disband all such councils.[5]Unlike those advisory councils, the ERISA Advisory Council was established through the ERISA statute. That may not make a difference in the short term since some statutorily required positions and committees have been cut and await. Before the most recent terminations, the EBSA was already running short on staff. Further cuts may hamstring it when it comes to enforcement. We have noticed a tendency by EBSA to shift focus between high and wide possibly due to budget shortfalls.[6]
A shortage of staff by EBSA could mean less enforcement activity. Or it could mean errors and delay. If the EBSA is still tasked with investigating, a small budget and a handful of overworked investigators may mean investigations last longer and those investigated have to do more of the heavy lifting when it comes to whittling down requests.
[1] https://www.dol.gov/newsroom/releases/osec/osec20250311
[3] https://www.plansponsor.com/daniel-aronowitz-nominated-to-head-ebsa
[5] https://www.plansponsor.com/what-dol-layoffs-could-mean-for-the-future-of-ebsa
[6] https://www.bcgbenefits.com/blog/high-vs-wide
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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