DOL Puts Fiduciary Rule on HoldDOL Puts Fiduciary Rule on Hold
The government seeks to suspend pending litigation surrounding the fiduciary rule, to allow the Labor Department to decide how to proceed under the new administration.
The Department of Labor filed a motion to hold its consolidated appeals against district court stays of the effective date of its fiduciary rule in abeyance, given the recent change in administrations. The abeyance temporarily suspends activity in the pending litigation, and parties no longer have to file responses by Feb. 14.
“New agency officials are still in the process of onboarding and familiarizing themselves with all of the issues presented by pending litigation,” the filing said. “To allow new DOL officials sufficient time to become familiar with the issues in these cases and determine how they wish to proceed, the government respectfully moves to place these consolidated appeals in abeyance, with status reports due at 60-day intervals.”
The action stems from two lawsuits filed last year against the DOL’s fiduciary rule, which was released in April and was to go into effect in September.
The Federation of Americans for Consumer Choice and several co-plaintiffs were the first to file a suit in May in Texas’ Eastern District, claiming the DOL wants to “fundamentally reshape” settled industry practices. The group had previously filed a lawsuit in the same court several years earlier, seeking to void prior DOL fiduciary mandates released by the Trump administration.
That suit was followed by a second, also filed in Texas, by plaintiffs including the American Council of Life Insurers, several regional divisions of the National Association of Insurance and Financial Advisors, the Insured Retirement Institute and Finseca, a trade group for financial services professionals. They argued the rule was too similar to the previous one vacated in 2018.
Over the summer, the two district courts temporarily stayed the department’s fiduciary rule, arguing it “suffers from many of the same problems” as a previously-vacated version of a fiduciary standard for insurance professionals.
In September, the government appealed both district court decisions days before the rule’s implementation date.
In October 2023, President Joe Biden unveiled the proposed rule as part of his administration’s larger fight against so-called “junk fees” in numerous industries. The rule would redefine the definition of fiduciary under ERISA.
Just this week, President Donald Trump nominated Daniel Aronowitz as his assistant secretary of labor for the Employee Benefits Security Administration (EBSA), the unit responsible for crafting the fiduciary rule. Aronowitz currently serves as president of Encore Fiduciary, a fiduciary liability insurance underwriting company for employee benefit plans. Lisa Gomez previously held that role at the DOL.
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