House Republicans press DOL on plan sponsor investigation practices

Two key House Republicans are raising concerns with the Department of Labor, stating that the Employee Benefits Security Administration's investigations into plan sponsors are often lengthy and burdensome.

"There seems to be no limit on the amount of document requests, interviews and questions an investigator may ask," wrote Rep. Virginia Foxx, R-N.C., chair of the Education and the Workforce Committee, and Rep. Bob Good, R-Va., chair of the Health, Employment, Labor and Pensions Subcommittee, in a Sept. 19 letter to Acting Labor Secretary Julie Su. "The result is increased compliance costs, which harm those participating in employer-sponsored retirement programs."

The lawmakers are seeking information related to the department's investigation practices, including:

1. A list of all open investigations by the initial date the investigation opened (grouped by calendar quarter), the duration of the investigation and the specific purpose of the investigation.
   
2. An explanation of any timeframes or internal guidance imposed on the timeliness of conducting and closing out investigations, as well as procedures that are taken to ensure those timeframes are honored.
   
3. A sample copy of personnel appraisal criteria for ensuring investigations are timely and efficiently carried out and closed.
   
4. An explanation of the specific steps taken to close all persisting investigations and the consequences to investigators, their supervisors, and EBSA management if investigations are allowed to languish beyond efficient timeframes.

Foxx and Good set an Oct. 3 deadline for the department to respond.

A Labor Department spokesperson said they have received the letter, and are reviewing it.

Michael P. Kreps, a principal at Groom Law Group, said plan sponsors and service providers understand that EBSA investigations are an important tool to protect plan participants, but they have legitimate concerns with how the department is conducting some of its investigations.

"Ideally, a DOL investigation would be fairly straightforward and take a few months," Kreps said. "In practice, however, investigations often remain open for years at a time, and investigators may put the case down for many months, leaving it to sit open while they turn to other projects. It's not uncommon to cycle through multiple different investigators over the course of the investigation, and that often means having to completely restart or, at the very least, revisit issues that were previously resolved."

Investigations that take years to complete are a signal that the process isn't working correctly, Kreps added.

"It certainly seems like it is time to re-examine whether the investigations are really being done as efficiently as possible," he said. "I have a feeling things could be improved given that agencies like the SEC seem able to complete complex investigations much quicker and with less confusion and unpredictability."

While EBSA's fiscal year 2023 enforcement numbers are not yet out, in December the agency reported that it recovered $931 million from its enforcement actions during the fiscal year ended Sept. 30, 2022, down from $1.9 billion in fiscal 2021 and $2.6 billion in fiscal 2020.