DOL Removes ESOPs from National Enforcement Project List

The Employee Benefits Security Administration (EBSA) at the US Department of Labor (DOL) announced today that it removed ESOPs from its national enforcement project list. ESOPs had been on that list since 2005 as one of five items on the list, which also included improper handling of various health plan issues, criminal abuse of defined contribution plans, plan investment conflicts, and benefit distribution violations.

The ESOP project focused on improper valuation, fiduciary conflicts of interest, and “wasteful” corporate spending. Being on the list meant that ESOPs were more likely to be audited, investigated, or sued, although in recent years, activity on all those fronts has dropped significantly.

The change is consistent with the new DOL’s leadership’s stated intention to create a more favorable regulatory environment for ESOPs.

In addition, Timothy Hauser, the EBSA's long-time deputy assistant secretary for program operations, has resigned. That role is currently being filled by Michael Schloss, who is serving as the acting deputy assistant secretary. Mr. Schloss joined the DOL in 1991 and has decades of litigation experience. Immediately before his current role, he was the EBSA's enforcement director.