The US Department of Labor (DOL) maintains a robust investigatory program for auditing employee benefit plans for potential ERISA violations. Under the Biden administration, the DOL’s ERISA enforcement activities and investigations have remained a high priority. As such, ERISA plan fiduciaries and service providers can expect the DOL to continue its ever-evolving enforcement program targeting both fiduciaries and nonfiduciary service providers.
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EXAMINING A RANGE OF EMPLOYEE BENEFITS
AND EXECUTIVE COMPENSATION ISSUES
AND EXECUTIVE COMPENSATION ISSUES
While the US Department of Labor’s (DOL’s) recently proposed regulations regarding automatic portability transactions would place the onus of compliance on transfer providers, a number of the provisions would trigger ERISA fiduciary considerations for plan administrators of defined contribution plans that offer these automatic portability transactions, particularly “transfer‑in” plans.
The US Department of Labor (DOL) final amendment to Prohibited Transaction Class Exemption 84-14, the so-called QPAM Exemption that is commonly relied upon by investment managers for ERISA-governed employee benefit plans and individual retirement accounts to avoid potential prohibited transaction issues, was published in the Federal Register on April 3, with the changes becoming effective on June 17, 2024.
Recent headlines involving the Central States Teamsters Pension Fund and the Pension Benefit Guaranty Corporation’s (PBGC) Special Financial Assistance (SFA) Program highlights an issue with meaningful consequences for multiemployer defined benefit plans—unreported deceased participants. In fact, PBGC’s alleged overpayment of $127 million under the American Rescue Plan Act’s SFA Program covering an estimated 3,500 deceased participants sparked PBGC to implement specific death certification measures for future applicants to the SFA Program.
The US Supreme Court heard arguments on January 17 in Relentless v. Department of Commerce and Loper Bright Enterprises v. Raimondo. In both cases, a commercial herring fishing company challenged a regulatory requirement that the company cover the costs of an observer required to ride along on the fishing boat to confirm compliance with various regulatory requirements.
Fiduciary committees have long been established in connection with retirement plans to manage the investment, legal compliance, and operational risks that can arise under the Employee Retirement Income Security Act of 1974, as amended (ERISA). Since the enactment of the Patient Protection and Affordable Care Act (ACA) and, more recently, the Consolidated Appropriations Act, 2021 (CAA), welfare plan fiduciaries continue to take on increasing compliance responsibilities. Given the increased legal complexity of welfare plan administration, it may be time to consider establishing an administrative committee to help mitigate the various risks involved with managing a welfare plan.
US state and federal laws have increasingly sought to regulate environmental, social, and governance (ESG) investing—a trend that continued in 2023. This increased regulatory focus has impacted benefit plans, including ERISA plans and, especially, public retirement plans.
The US Department of Labor (DOL) recently issued DOL Advisory Opinion 2023-01A, (Advisory Opinion) addressing racial equity and supplier diversity. The Advisory Opinion answered an inquiry about the application of ERISA’s fiduciary duty requirements to an employer’s racial equity program.
As discussed in a previous LawFlash, the US Department of Labor’s Final Rule on Prudence and Loyalty in Selecting Plan Investment Options, also known as the ESG Rule, contains provisions on proxy voting, which are not limited to environmental, social and governance issues. As a reminder, the ESG Rule changes regarding proxy voting will go into effect on December 1, 2023.
Since its effective date in February 2023, the Department of Labor’s (DOL’s) rule officially titled Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, and colloquially called the “ESG rule,” has been challenged in both the courts and US Congress. In September 2023, a federal district court in one of the two court challenges ruled in favor of the DOL and its authority to adopt the ESG rule.