Whoever thought a Republican administration would be easier on ERISA DOL fines and other enforcement efforts would be very wrong.
For FY 2017, the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) agency closed 1,707 compliance reviews with 1,114 of them (65.3%) resulting in $1.1 billion of total monetary results.
This represents a significant 72% INCREASE in ERISA DOL fines when compared to only $777 million in FY 2016.
To see where this is going, we reviewed the EBSA’s FY 2018 budget request and found (in addition to the $184 million budget and 908 FTE’s) their 2018 Strategic Plan has a three very important goals:
- to increase their five (5) year rolling average in enforcement results by 2-5%
- completing 3,500 reporting compliance reviews (that’s more than double last year’s 1,707)
- to integrate many of their enforcement activities
These three points demonstrate their commitment to ensuring employers are taking them seriously. Moreover, their desire to consolidate many of their activities into a single comprehensive and integrated approach, is very interesting.
As documented in their budget, the EBSA believes by integrating their various programs, “particularly as it relates to regulatory and enforcement efforts, EBSA believes that restructuring its budget activities will facilitate the allocation and redistribution of resources from lesser performing and lower priority strategies/programs to better performing and higher priority strategies/programs.”
Additionally, “The restructured budget activities will create a more responsive organization that facilitates results-based management. Additionally, the restructured budget eliminates unhelpful and artificial lines between activities, all of which are aimed at protecting the security of employee benefits.”
How this impacts you in 2018 (and beyond)
In our landmark 2013 analysis that reviewed how DOL audits impact health and welfare plans, we found more than 32% of health and welfare plans incurred fines and penalties of more than $10,000 and 5% in excess of $50,000.
Now, in light of the EBSA’s more streamlined approach, it means if you still believe “the DOL will never get around to auditing me” you need to rethink your position.
With more and more data being reported to (and shared) electronically between agencies, it should be presumed that any DOL audit (including common Wage and Hour audits), OSHA audit, IRS audit, HHS audit or any other of the Federal agencies, will trigger an investigation into other areas of employer non-compliance.
To prepare for an eventual DOL audit (or civil lawsuit) employers should adopt a comprehensive compliance approach that include tools to ensure compliance deadlines are met, risk assessments to identify compliance gaps, and other training and educational resources.