If former Vice President Joe Biden wins the presidential election, that outcome would have a big impact on the Department of Labor -- and the coming months will determine how quickly the agency moves forward with new rule proposals.
The process of making cabinet appointments and filling many subcabinet jobs could take months or even the better part of a year, said lawyers who spoke Thursday at the online Spark Forum. The pace of appointments could also slow any reversals of Trump-era regulations a new administration would seek.
How smoothly a transition of power will go is a big question. President Donald Trump has claimed without any evidence that the election has been rigged against him and has indicated that he may not readily accept election results that are anything but in his favor.
In normal times, a president-elect spends the months after the election identifying candidates to lead agencies and help set priorities once the term begins.
“In a typical or traditional administration, it’s not a lengthy process. A transition team will have already identified or will be in the process of identifying a secretary,” said Jason Roberts, CEO of the Pension Resource Institute. “A [Labor] secretary would work with the administration to find the appointed deputy position, which would be the head of [the Employee Benefit Security Administration] … It can actually happen very quickly.”
That did not happen at the start of the Trump administration. Trump’s first nominee to lead the DOL, fast-food industry CEO Andrew Puzder, withdrew his nomination amid questions about his personal life and background. Former Labor Secretary Alexander Acosta was confirmed in April 2017 but resigned last year amid ongoing criticism over a lenient plea deal he had made with disgraced financier and sex offender Jeffrey Epstein more than a decade earlier, when Acosta was a federal prosecutor in Florida.
“There were two or three misfires last time, and then Acosta ended up having to step down. This is the most chaotic DOL” in recent history, Roberts said. With an incoming Biden administration, “I don’t think there will be much of any delay” in the appointment or regulatory process, he said.
Current Labor Secretary Eugene Scalia, whose nomination and confirmation quickly followed Acosta’s departure, has made much of his short time leading the agency. Over the past year, the DOL has finalized a rule on the use of environmental, social and governance criteria in retirement-plan investments, proposed an investment-advice rule in sync with the SEC’s Regulation Best Interest, proposed a rule that would curb proxy voting by pension plan fiduciaries, and issued a letter supporting the use of private-equity investments in defined-contribution plans.
During the Trump administration, various high-level jobs within the DOL were left vacant, particularly at the beginning of Trump’s term, when there was a focus on deregulation. Preston Rutledge wasn't appointed as head of EBSA until 2017; he stepped down from that role at the end of May. Acting assistant secretary Jeanne Klinefelter Wilson is filling the role.
“We’re going to go with the assumption right now the vice president wins the election,” Chris Gaston, senior policy director at Davis & Harmon, said at the Spark Forum Thursday. That was before Biden took a lead in the number of votes in Pennsylvania and Georgia, pulling him closer to a decisive victory.
“A number of Trump priorities will be revised and reversed,” Gaston said. “It’s going to be slower than some Democrats will want, but being in control of the administration has enormous power.”
Given the time necessary to fill cabinet positions, “it’s months before the new administration can get started on reversals or advancing its new agenda,” he said. Under former President Barack Obama, it took several months before former EBSA head Phyllis Borzi was confirmed, Gaston noted.
Any rules that have not been published in their final version in the Federal Register within 60 days of the inauguration, which is scheduled for Jan. 20, can be reversed by Congress relatively easily through the Congressional Review Act. And a new administration can freeze progress on any proposed rules that have not been finalized.
The DOL’s recently finalized “Financial Factors in Selecting Plan Investments” rule, which implicitly targets the use of ESG criteria in retirement plan investments, would require a lengthy, full rulemaking process to reverse, lawyers noted.
Given the increasingly likelihood of a Biden administration, the current DOL will be racing to finalize the proxy voting and investment advice rules. If those are not published by around Nov. 20, a new administration would have an easier time reversing them, Roberts said.
“One would expect the advice exemption [rule] is not too far behind, except that it hasn’t been sent to [the Office of Management and Budget] yet,” he said.
Reversing the investment advice rule “will be priority No. 1” for the DOL under a new administration, Roberts said.
“Get ready for a true fiduciary rule 3.0,” he said. “That will take some time, because they will want to do it in a very transparent way, to make sure nobody is able to claim any defect [in the future] under the Administrative Procedure Act. That’s something they will start working on in 2021.”
A new administration is also likely to revisit the advisory opinion on the use of private equity in DC plans, Mike Hadley, partner at Davis & Harmon, said during the Spark Forum.
A Biden administration would also be much more likely to support the automatic IRA programs that have been launched by several states, and it would likely clarify that stance in a lobbying group’s lawsuit that has sought to halt California’s CalSavers program, Hadley said. The current administration has issued letters to the court voicing support for the plaintiffs, claiming that the state programs are preempted by ERISA.
“At a minimum, they might reach out to the courts and say, ‘We now have a different view on that,’” he said.
In the coming year, the DOL is also likely to issue a set of tips or best practices governing cybersecurity for retirement plans, he said. Congress is also looking into that subject -- several members have asked the Government Accountability Office to study retirement plan cybersecurity, and a report from the group is due to come out next year, Gaston said.
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
