Secretary Acosta Acknowledges Need for Clear Guidance from DOL
DOL Enforcement Actions Fewer Since 2013 due to "Much" Better Industry Compliance
WASHINGTON, May 7, 2019 /PRNewswire/ -- The ESOP Association today welcomed Congressional testimony by U.S. Secretary of Labor Alexander Acosta acknowledging his "strong" support for Employee Stock Ownership Plans (ESOPs). Acosta also noted his view that ESOP companies have made real progress in legal compliance and that The Department of Labor (DOL) can do a better job at providing guidance.
"We are grateful that Secretary of Labor Acosta and the Department of Labor have recognized the effort made by ESOPs and their supporting professionals to fully comply with the very complex laws surrounding ERISA and company valuation. We are thankful for and welcome the Secretary's posture to help establish clear guidelines," said ESOP Association President and CEO James Bonham. "There is clear evidence of the benefit ESOPs provide to employees. But the current absence of clear regulatory guidance from the Department of Labor is artificially constraining new ESOP formation. Without better guidance from DOL, the losers are the millions of hard working Americans who miss out on the opportunity to own part of the company where they work."
Responding to a question from Rep. Brett Guthrie (R-KY-2) at a May 1 hearing of the House Education and Labor Committee, Secretary Acosta stated: "The industry is conforming much more closely to the law and so, I think enforcement actions peaked sometime around 2013 and have been declining since as industry becomes integrated with...what pension laws require."
Secretary Acosta further acknowledged the benefit ESOPs provide to their employees. When Rep. Guthrie noted that the ESOPs with which he is familiar "have provided extremely lucrative retirement plans for their employees," Secretary Acosta replied: "I strongly support ESOPs I think ESOPs are of benefit to employees."
"We also thank Rep. Guthrie for asking Secretary Acosta for greater regulatory clarity through guidance," Bonham continued. "It is impossible to try to comply with an extremely complex set of laws when the enforcing agency offers no written guidance and is inconsistent in the arguments it presents from case to case when pursuing enforcement actions."
Rep. Guthrie asked Sec. Acosta for clearer guidelines—a request the Secretary acknowledged was "fair."
Secretary Acosta also welcomed feedback on ways to improve ESOP regulations. "If there are particular areas where the guidelines need to be more clear, we'd appreciate knowing that so we can focus the inquiry," Sec. Acosta said.
The ESOP Association: The ESOP Association is America's largest employer-sponsored advocacy and education association focused on employee stock ownership plans. Founded in 1978, the Association seeks to enhance federal laws governing ESOPs, provide members with expert information, and fund research via the Employee Ownership Foundation.
The ESOP Association is a national non-profit organization with 18 local Chapters. Its members include ESOP companies, companies considering an ESOP, and service providers that assist in setting up and maintaining ESOPs.
SOURCE The ESOP Association