DOL Ends Years-Long Investigations, Offers More Help

The Department of Labor announced a major shift this month that could save Long Island small businesses thousands in legal fees. Rather than pursuing extended litigation against employers who violate ERISA rules, the DOL now pledges to lead with compliance assistance and interpretive guidance.

This represents a significant departure from the previous enforcement-heavy approach that left many Nassau and Suffolk County employers facing years-long investigations over benefits administration errors.

What Changed in DOL Enforcement

Daniel Aronowitz, head of the DOL's Employee Benefits Security Administration, committed during his confirmation hearing to "end the practice of open-ended investigations that go on for years." The new approach prioritizes sub-regulatory guidance—including legal briefs and opinion letters—to help employers understand their obligations before problems arise.

The DOL has also expanded its Delinquent Filer Voluntary Correction (DFVC) Program, allowing plan administrators to self-correct violations and significantly reduce penalties. This voluntary correction approach gives employers a path to resolve issues without costly litigation.

Impact on Long Island Small Businesses

For medical practices, dental offices, and professional service firms across Long Island, this shift could mean substantial cost savings. Previously, a minor error in 401(k) plan administration or health plan disclosures could trigger investigations lasting years, with legal fees often exceeding the actual violation.

The new approach signals that employers who proactively seek guidance and demonstrate good-faith compliance efforts are far less likely to face protracted enforcement actions. However, this doesn't reduce the importance of proper benefits administration—it simply changes how violations are addressed when they occur.

As we discussed in our recent post on DOL's expanded self-correction programs, employers now have more opportunities to fix mistakes before they become major problems.

What Employers Should Do Now

Long Island businesses should use this compliance-friendly window to their advantage. First, review your current benefit plan documents and administration processes. Look for potential gaps in required disclosures, especially with the March 31st deadline for 1095-C forms approaching.

Second, consider requesting sub-regulatory guidance from the DOL if you have questions about plan design or fiduciary responsibilities. The agency has committed to providing more interpretive materials rather than leaving employers to guess at compliance requirements.

Third, ensure your 401(k) plan documents clearly authorize how you handle forfeitures and other administrative decisions. Recent DOL amicus briefs have supported employers who make reasonable forfeiture decisions when properly documented in plan materials.

New York's Additional Requirements

While this DOL shift applies uniformly across the country, New York employers must remember that federal ERISA compliance is a floor, not a ceiling. New York State may impose additional requirements on health plans and retirement benefits that aren't affected by federal enforcement changes.

This means Long Island employers still need to navigate both federal ERISA standards and New York insurance regulations, particularly for health plans. The reduced federal enforcement risk doesn't eliminate the need for careful compliance planning.

The shift toward compliance assistance rather than litigation represents a welcome change for small businesses that have struggled with complex benefits regulations. However, the underlying compliance obligations remain the same—only the DOL's response to violations has changed.

Benton Oakfield can help you take advantage of this new compliance-friendly environment by reviewing your current benefit plans and identifying areas where proactive guidance might prevent future issues. Our team stays current on both federal and New York State requirements to ensure your business remains compliant under all applicable rules.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This summary is for informational purposes only. Please contact your Benton Oakfield representative to review how these changes impact your specific plan documents.

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