Tag Archives for " DOL "

DOL proposes delay to second part of fiduciary rule

  • August 30, 2017

DOL proposes delay to second part of fiduciary rule

The Labor Department issued a proposal today to delay by 18 months the applicability date of the remaining provisions of the Obama administration’s fiduciary rule.

Under a proposal set for publication in Thursday’s Federal Register, the second part of the rule would take effect July 1, 2019, instead of Jan. 1, 2018. The second part of the rule includes additional requirements under the so-called best interest contract exemption, which outlines the conditions under which financial advisers may receive commissions.

The fiduciary rule, which was proposed in 2015 and finalized in April 2016, is sometimes called the “conflict of interest rule.” It requires that broker dealers consider only their client’s best interest, irrespective of commissions or fees when providing retirement advice.

In June, the Labor Department allowed part of the rule to take effect, including provisions under the best interest contract exemption that require advisers to provide advice that is in the best interest of their clients, to charge reasonable compensation and to avoid misleading statements. Among the provisions that wouldn’t take effect now until July 2019 is a requirement that financial advisors provide their clients with a written contract detailing their obligations as a fiduciary.

The securities industry opposed the fiduciary rule, and earlier this year, the White House issued a memorandum that directed the Labor Department to review it.

In today’s proposal, the Labor Department said that the “primary purpose” of the delay was to give DOL “the time necessary to consider possible changes and alternatives to these exemptions.”

“The Department is particularly concerned,” DOL said, “that without a delay in the applicability dates, regulated parties may incur an undue expense to comply with conditions or requirements that it ultimately determines to revise or repeal.”

Business groups praised the Labor Department for delaying the second effective date. In a written statement, Dale Brown, president and CEO of the Financial Services Institute, said that “President Trump ordered a full review of the rule and its impacts, and it is critical that the DOL completes that review.”

But advocacy groups blasted the delay. In a written statement, Heidi Shierholz, senior economist and director of policy at the left-leaning Economic Policy Institute, said that “the only people who benefit from the delay of this rule are unscrupulous financial advisers and financial services companies, who will be allowed to steer customers towards investments that pay a lower rate of return for the saver, but offer a higher commission to the adviser.”

The public will have 15 days to comment.


  • June 9, 2017

All the information below comes from Politico, which is a paid service CUE subscribes to on behalf of our members.  This morning, they published a great summary of the initial impact of the fiduciary rule in their Morning Shift newsletter which we are sharing here.   

The Obama Labor Department’s fiduciary rule — which requires that broker dealers consider only their client’s best interest (and not commissions or fees) when providing retirement advice — will take partial effect today; the rest takes effect in January. Here’s the breakdown:

What takes effect today:
— The rule’s broadened definition of fiduciary and investment advice.
— Components of the “best interest” contract exemption, which outlines certain conditions under which broker dealers may continue to receive fees and commissions. The provisions that take effect today require that broker dealers provide advice in their client’s best interest; receive compensation that is reasonable; and do not provide misleading information.

What takes effect in January:
— All remaining components of the “best interest” contract exemptions.
— Companies that provide advice to IRA holders will need to sign a contract with their clients declaring that they are acting in the clients’ best interest.

Implementation of the fiduciary rule was never a slam dunk under the new president — and its future still remains a bit murky. In April, the Labor Department delayed the regulation’s effective date in response to a White House a memorandum. Labor Secretary Alexander Acosta eventually decided that there was no legal justification for delaying the rule further, and outlined his reasoning in a May 22 Wall Street Journal op-ed . But Acosta also indicated that he would review the regulation.

Earlier this week, the Labor Department sent a proposed request for information on the rule to the White House Office of Management and Budget. Meanwhile, congressional Republicans haven’t given up their efforts to block the measure. On Thursday lawmakers in the House and Senate introduced legislation to halt the fiduciary rule, and the House passed the CHOICE Act, a repeal of the 2010 Dodd-Frank financial reform bill that also included a provision to repeal the fiduciary rule.

Subway enters into “model” enforcement agreement with Department of Labor

  • August 1, 2016

Subway enters into “model” enforcement agreement with DOL  dollar-signs-black

This just came out via various sources including Twitter and Politico, outlining the details of a new “model agreement” for enforcement of wage enforcement actions.

This quote from Dr. David Weil may be the most telling single line of the attached blog post.

“Our work with Subway breaks new ground in how we can work with the regulated community — not only with employers, but with franchisors, suppliers, retailers and others — to channel their influence to ensure that all employers along a supply chain or otherwise linked in commerce play by the rules.”

Keeping it Fresh: New Agreement with Subway Will Protect Workers

Vigorous enforcement has always helped the Wage and Hour Division drive compliance in the modern workplace, but we recently added a creative partnership to our menu of tools by signing a cooperative agreement with Subway, the world’s largest franchisor.

In short, the agreement serves our two missions and codifies our shared interests. Subway, like every franchisor, is committed to protecting the integrity and identity of its brand. Our mission is to protect workers’ paychecks. The agreement serves those two objectives by boosting franchisees’ compliance with labor laws, and helping us to ensure that workers get paid the wages to which they are legally entitled.

The larger context of this agreement is that the restaurant industry demonstrates significant compliance problems. Last year alone, the Wage and Hour Division found more than $38 million in back wages for nearly 47,000 restaurant workers – almost exclusively due to minimum wage and overtime violations. And with a total of 7.3 million employers covered by our laws, the Wage and Hour Division must strategically pursue its mission to ensure employees are properly paid for their hard work.

As we remain grounded in that mission, we’re exploring new and innovative opportunities to shape compliance behavior in the modern workplace and creative partnerships have become critical to raising compliance with basic labor standards.

Our work with Subway breaks new ground in how we can work with the regulated community — not only with employers, but with franchisors, suppliers, retailers and others — to channel their influence to ensure that all employers along a supply chain or otherwise linked in commerce play by the rules. This agreement takes collaboration to the next level; we’re not simply stating our good intentions and agreeing that everyone has an interest in complying with the law.  We’re using our limited resources to affect the most good.

Specifically, the agreement builds upon the division’s ongoing work to provide technical assistance and training to Subway’s franchisees. It also provides an avenue for information-sharing where we will provide data about our concluded investigations with Subway, and they will share their own data with us, generating creative problem solving and sparking new ideas to promote compliance.

When circumstances warrant, the franchisor will remind franchisees of the Wage and Hour Division’s authority to investigate their establishments and to examine records. It also specifies that Subway may exercise its business judgment in dealing with a franchisee’s status within the brand, based upon any history of Fair Labor Standards Act violations. The agreement provides a model for exacting compliance, at scale, in an industry that has experienced problems.

There is not a one-size-fits-all workplace, so our multi-faceted approach must constantly evolve to keep pace. We have an obligation under the law to ensure that employers operate in compliance – and this agreement represents a new alternative to help us accomplish that mission.

Our collaboration with Subway can be a recipe for success, demonstrating how government and industry can work together to solve common problems. In doing so, we protect vulnerable workers and ensure a fair day’s pay for a fair day’s work.