Congress and DOL Recalibrate Benefits Oversight

Recent federal actions signal a shift in benefits plan oversight, combining legislative scrutiny of Employee Benefits Security Administration (EBSA) enforcement practices with regulatory changes to disclosure requirements.

On July 21, the Department of Labor (DOL) finalized a rule eliminating 29 CFR 2550.401c-1, which had required insurers to disclose general account allocations to plan fiduciaries. The rule affects insurance-based employee benefit plans that use transition policies and is intended to reduce administrative burdens. The DOL said the change reflects industry feedback and aligns with broader efforts to streamline fiduciary compliance.

Separately, a House subcommittee held a hearing examining the enforcement practices of the EBSA. Lawmakers focused on the agency’s use of common interest agreements (CIAs), which allow the agency to share investigative materials with plaintiffs in Employee Retirement Income Security Act (ERISA) litigation. Critics argued that the practice discourages cooperation and raises due process concerns. EBSA officials countered that CIAs are rare — only 12 have been executed in 15 years — and are legally permissible under ERISA.

In response, two bills have been introduced in the House:

• The EBSA Investigations Transparency Act would require annual reporting on investigation timelines and justification for probes exceeding 36 months.
• The Balance the Scales Act would mandate disclosure of CIAs to affected fiduciaries and require the EBSA to report their use annually.

The hearing also highlighted concerns over prolonged investigations. Industry representatives cited multiyear probes with unclear objectives, while EBSA officials noted that only 3% of cases exceed four years and often involve complex issues such as mental health parity enforcement.

Together, these developments reflect a recalibration of federal benefits oversight — reducing regulatory burdens for plan sponsors while increasing transparency in enforcement. The changes may affect fiduciary governance, compliance documentation, and legal exposure for benefits plan administrators.