Industry Voices Raise Alarms Over EBSA Practices in Latest Hearing
Industry experts on Tuesday testified before the U.S. House of Representatives Education and Workforce Subcommittee on issues of transparency and oversight at the Department of Labor’s (DOL) Employee Benefit Security Administration (EBSA).
The hearing, “Restoring Trust: Enhancing Transparency and Oversight at EBSA,” centered on proposed congressional reforms that addresses allegations of collusion, abuse, and opacity at the DOL subagency.
Led by Representative Rick Allen (R-GA), who is also chairman of the Health, Employment, Labor, and Pensions Subcommittee, the hearing touched on the necessity of two bills that would drive transparency within EBSA.
“The Employee Benefits Security Administration … ran burdensome and inefficient employee benefit plan investigations that lasted for years with repetitive document requests, staff turnover, and delayed findings,” said Chairman Allen in his introduction.
The first bill, titled the EBSA Investigations Transparency Act, was first introduced by Congresswoman Lisa McClain (R-MI) and would help increase transparency and clarity in EBSA’s investigatory actions by publicizing details of the subagency’s enforcement program.
The second proposal, named the Balance the Scales Act and introduced by Congressman Michael Rulli (R-OH), centers around the DOL’s use of common interest agreements. Such agreements have raised alarms about potential collusion within the agency and its relationship with attorneys who bring plan sponsors to trial.
Lars Golumbic, principal at Groom Law Group, testified that while working on an employee benefits case, his firm found evidence of collusion between EBSA and plaintiff attorneys, in which trial lawyers were able to receive case information from the subagency. Such actions provide an unfair advantage to the plaintiffs and highlights a common interest among the subagency and plaintiff attorneys, Golumbic said in his statement.
“The legislative solutions being discussed today go a long way toward ensuring regulatory agencies are transparent, accountable, and collaborative—rather than adversarial—in their oversight of America’s job creators.”
Andy Banducci, ERIC
Others expressed concerns over the length of EBSA’s investigations and its approach in probing plan sponsors. Andy Banducci, senior vice president of Retirement and Compensation Policy at the ERISA Industry Committee (ERIC), noted that plan audits commissioned by the subagency have taken five, six, or even seven years to complete due to turnover. ERIC members have also complained of a lack of responsiveness by the subagency and variations in modes of operation depending on EBSA’s regional offices.
“Employers who are investing millions of dollars in compliance and take pride in the benefits programs they offer to workers, describe a troubling reality — wandering investigations that feel more like a ‘gotcha’ approach to enforcement,” said Banducci. “These lengthy and ever-evolving investigations are costly, time-consuming, and divert resources away from workforce investment. The legislative solutions being discussed today go a long way toward ensuring regulatory agencies are transparent, accountable, and collaborative—rather than adversarial—in their oversight of America’s job creators.”
Jim Bonham, president and CEO of the Employee Stock Ownership Association, also touched on concerns over EBSA’s investigations on ESOP plans, claiming that the subagency operates an anti-ESOP bias that deters employers from offering the plans.
“EBSA needs substantial reforms. It is difficult to find an ESOP that has not been investigated by EBSA in some form. It is the expectation that they will be investigated, not the exception,” Bonham said.
However, Ali Khawar, the former principal deputy assistant secretary of EBSA and now the founder and president of FCP, a compliance consulting practice, pointed out the subagency’s lack of staffing and minimal budget as a reason for its low responsiveness.
Khawar, who left his position in January prior to President Donald Trump’s inauguration, clarified that as of November 7, 2024, only 3% of EBSA’s investigations that have been opened for over 48 months old were still active. Over a 15-year span, only 12 investigations had a common interest agreement, with a ratio of .04% out of all investigations, he added.
Further, activity in recent months has triggered substantial losses in EBSA’s investigative staff, Khawar defended. For example, firings and layoffs enacted by Elon Musk’s Department of Government Efficiency (DOGE) resulted in a third of the subagency’s investigative staff being cut.
“There has been a base budget that has not kept pace with increases in cost,” Khawar stated. “You have an agency that is very small relative to its responsibilities.”
Editor’s Note: This article has been updated to include additional details surrounding EBSA’s active investigations.
SEE ALSO:
House Committee Urges DOL IG to Investigate EBSA
ERIC Backs Bills Aimed at Bringing Transparency, Accountability to EBSA
Trump EBSA Nominee Aronowitz a Stern Critic of Frivolous ERISA Litigation
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
