DOL De-Emphasizes ESOP Enforcement

The Department of Labor has removed employee stock ownership plans from its national enforcement projects as part of announced updates to its enforcement priorities under new leadership.

The move fulfilled a promise made by Employee Benefits Security Administration Head Daniel Aronowitz during his confirmation hearing last June to “end the war on ESOPs.”

The ESOP Association, which advocated to have ESOPs taken off the DOL’s enforcement list, stated that the decision effectively dismantled a two-decade enforcement initiative targeting ESOPs, adding that the move opens the door for the DOL to support ESOPs. The ESOP Association launched a paid campaign last year to urge Aronowitz’s confirmation.

ESOPs have also received a favorable view from members of Congress from both parties recently. The Senate unanimously passed ESOP bills that would both mitigate their valuation risks and add two representatives of ESOP interest to the ERISA Advisory Council.

In addition, the DOL priorities will reduce a focus on finding “missing participants”—workers who have lost or forgotten old retirement accounts after switching jobs. The SECURE 2.0 Act of 2022 originally set up the Retirement Savings Lost and Found Database, which seeks to help workers find lost accounts and reconnect with assets.

“We are committed to conducting our investigations in a timely and fair manner, ensuring both compliance outcomes and recoveries that benefit participants and beneficiaries,” Aronowitz said in a statement. “We urge plans and service providers under review to respond promptly to our requests for information and findings, which will aid us in resolving issues efficiently and effectively.”

The DOL’s other enforcement priorities for fiscal 2026 include:

• Cybersecurity;
• Barriers to mental health and substance use disorder benefits;
• Protecting benefit distributions;
• Retirement asset management;
• Surprise billing; and
• Criminal abuse of contributory benefit plans.

In its announcement, the DOL stated it will continue to monitor abuses in multiple employer welfare arrangements, although the department noted the effort is not a national project.

“EBSA’s enforcement powers are broad and impact American workers, retirees, and their families through many stages of life. Because of that, it’s vitally important that our investigators focus on areas that we feel will produce the best results,” Deputy Secretary of Labor Keith Sonderling said in a statement. “By recalibrating the areas our investigators focus on, EBSA investigations will be more efficient, responsive and prioritize serious misconduct rather than minor foot faults.”