The Department of Labor is undergoing changes that may have a significant impact on the employee ownership community.
Today, the nomination of Eugene Scalia as Secretary of Labor moved another step closer to confirmation. Approved by the Senate Health, Education, Labor, and Pension Committee, Scalia’s nomination is expected to be put to a final vote later this week.
The nomination is notable for the ESOP community because it coincides with a restructuring at the Department of Labor. Some reports see the changes within the department as a sign that the agency will be leaner and able to produce regulations more quickly.
This article notes that the Employee Benefits Security Administration (EBSA), which oversees ESOPs, will now have a structure akin to that of the agency’s Office of the Solicitor. That office, the article states, has “a reputation for greater efficiency” and the changes may result in moving “guidance and regulations at a faster pace.”
This makes the nomination of Scalia even more notable, since he served as the Labor Solicitor during the administration of President George W. Bush.
If the changes to the leadership and structure of DOL result in faster production of regulations, they would be welcomed by the ESOP community.
ESOPs were officially established in 1974 (by the Employee Retirement Security Act), and in the 45 years since there have been no regulations on fundamental issues such as valuation. In 1988, the Department of Labor went through the entire, cumbersome regulation making process—but never issued valuation regulations.
The lack of regulations is a severe impediment to the creation of new ESOPs and the maintenance of existing ESOPs. Hopefully the changes taking place at the Labor Department will result in the rapid production of regulations our community needs and deserves.