Ayotte Bill Helps Prompt Reconsideration of Labor Department Red Tape

Press Release

U.S. Senator Kelly Ayotte (R-NH), who introduced legislation earlier this year to protect employee stock ownership plans (ESOPs) from a costly new regulation proposed by the Department of Labor (DOL), today welcomed the DOL's announcement that it is now reconsidering the pending rule.

DOL's regulation, as originally proposed, would expand the definition of "fiduciary" under the Employee Retirement Income Security Act to include appraisers of all private ESOPs. As such, it would result in new compliance and regulatory costs for private companies offering ESOPs (nearly all of which are small businesses) and could jeopardize the availability of these plans in the future. The original version also would force appraisers to purchase expensive fiduciary insurance, employ specialized counsel, and could expose private ESOP companies to frivolous litigation.

Responding to concerns raised by small businesses in New Hampshire that offer ESOPs, Senator Ayotte introduced legislation in June that would reverse DOL's rule by explicitly exempting ESOP appraisals from the law's stringent fiduciary requirements. On Monday, citing concerns raised by members of Congress and the public, the DOL announced that it will re-propose its rule on the definition of a fiduciary. The Department plans to issue its new rule in early 2012.

"ESOPs are a valuable retirement option for a number of Americans, and they offer employees the unique opportunity to own stock and build retirement wealth in the company for which they work," said Senator Ayotte. "I will continue to work for New Hampshire small businesses that have ESOPs as the Labor Department continues the rule-making process."

J. Michael Keeling, President of The ESOP Association, said: "The ESOP community is grateful for Senator Ayotte's effective leadership in this campaign to stop the Department of Labor's proposal, and our New Hampshire ESOP companies are doubly grateful."

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