Chris Nicholls
Last month, the Department of Labor filed a motion for an appeals court to hold its appeals in two court cases involving its new fiduciary rule, and the court granted the stay. At that time, Labor Secretary Lori Chavez-DeRemer’s nomination was under consideration, but she had not yet been confirmed by the U.S. Senate.
Now, the DOL is requesting additional time to determine next steps on these cases challenging the retirement security rule finalized under the Biden administration. According to the motion filed with the U.S. Court of Appeals for the Fifth Circuit by the Department of Justice, the DOL is requesting an additional 60 days.
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“Due to the recent change in administration on January 20, 2025, DOL is now under new leadership,” read the motion. “The Court placed these appeals in abeyance to permit new agency officials to familiarize themselves with the challenged regulatory actions and underlying issues…
“DOL has informed us that new agency officials require additional time to decide how to proceed in these appeals. Because any action taken by the agency could affect the litigation.”
Last July, a judge put the DOL's new Retirement Security Rule, which was set to go into effect last September, on hold, and it seemed likely it would remain there until after the presidential election.
Now, “the government requests that the abeyance be extended for a further 60 days,” read the motion.
DOL’s hold on the fiduciary rule in 2024 had followed two federal court stays last July, which were put in place in an effort to delay implementation of the new fiduciary rule, which has been beset by lawsuits and Congressional efforts.
Related: New fiduciary rule on hold again, as judge grants DOL a pause on its appeal of 2 federal court stays
The new fiduciary rule, which is the DOL's latest attempt to extend fiduciary responsibilities under ERISA to include annuity sales, has hit legal roadblocks from the get-go filed by industry firms and member trade groups, including the Federation of Americans for Consumer Choice and the American Council of Life Insurers, which filed separate suits.
Under the Biden administration, the DOL had filed notices of appeal in the fall of 2024 in the two federal court rulings that stayed the implementation of the new fiduciary rule.
The new fiduciary rule regulated that financial advisors act in the best interests of clients. However, last fall, Sen. Elizabeth Warren released a report identifying that at least 29 annuity and insurance companies are offering agents perks – vacations and cash bonuses –"in exchange for the agents to sell their annuity and insurance products," said her “Cancun, Cruises and Cash: How the Department of Labor's New Retirement Security Rule Would End Insurance Industry Kickbacks that Cost Savers Billions” report.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
