The Legacy of DOL’s Champion for Employee Benefits

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Sean Forbes

Phyllis Borzi has one month to go in office as assistant secretary for the Department of Labor’s Employee Benefits Security Administration, but stacks of files are still heaped on her desk and on the floor.

Resting against one floor stack is a framed cartoon profile she was given at the Pension Rights Center’s 40th anniversary gala this fall. The crystal-shaped Frankel Fiduciary Prize from the Institute for the Fiduciary Standard also takes up space. There’s even an issue of Money Magazine at the conference table, in which she’s named as a Money Champion for 2016 (John Oliver, host of Last Week Tonight, took first place).

Borzi told Bloomberg BNA that she came into office in 2009 with three goals, or “pillars”: transparency, accountability and minimizing conflicts of interest. Her agency was sometimes successful, sometimes less so.

Count among the wins the plan fee disclosure regulations under Section 408(b)(2) of the Employee Retirement Income Security Act, the hard-fought fiduciary rule and an abundance of guidance under the Affordable Care Act. Among rules that didn’t get to the finish line was one that would have helped plan sponsors, especially small plan sponsors, provide lifetime plan participation illustrations.

“Sometimes we were more successful than others, because you can’t always hit a home run—sometimes you hit only a double or a triple,” she said.

‘The Issues Never Change.’

Borzi pointed out that the challenges that the benefits community faced during her years at EBSA were anything but new, a lesson re-enforced at an event she hosted at the DOL’s headquarters to celebrate the 40th anniversary of ERISA, the law upon which she had built her career.

On the guest list were her predecessors from both parties, and the topic of the evening was ERISA’s past, present and future.

“As I conceived this, it turned out exactly the way I thought it would: The issues never change, so we never really solve anything,” she said. “They just morph.” The politics of EBSA also weren’t as important as “the mission,” she said. Both parties generally agree on the issues, and even what the solutions might be, but no one had the “political will” to make the solutions reality, she said.

Of course, political will to push EBSA’s most ambitious rulemaking in many years—the fiduciary rule—went into overdrive after Thomas E. Perez took over the DOL as secretary in 2013. The long slog toward a final rule, originally proposed in 2010, only happened because of a high stakes focus by her boss, as well as Perez’s boss. Perez “and the president’s involvement were the game changers,” Borzi said. “We had the technical resources to get it done. But I couldn’t have done it myself.”

Helping expand coverage to more Americans by allowing states and municipalities to run private-sector retirement plans—such as workplace automatic payroll-deduction individual retirement accounts—was another important mile-marker, Borzi said. However, the rule was new territory, and a break from the ERISA law she had championed throughout her career, she said.

“Anybody who knows me knows that I spent most of my career trying to keep the states from moving forward. And so this was a radical change for me.” But if the states did go ahead without guidance from the DOL and get preempted by ERISA, “they would just be spinning their wheels.”

Time will tell how well the states do, Borzi said. “Will it move the coverage needle?” she wondered, with a shrug of her shoulders. “I don’t know. But we have to keep trying.”

Health Care

The DOL, Internal Revenue Service and the Department of Health and Human Services had their work cut out for them after the ACA became law, Borzi said. Producing about three dozen items of guidance with the agencies was “an enormous accomplishment. And in many these cases, we had the pen. That means we were the ones who had to keep the process moving,” Borzi said.

She also warned the incoming administration that unwinding the ACA will be more involved than opponents who have been chanting “repeal and replace” may expect. “My own personal opinion: These are wonderful slogans. But it’s not going to be so easy to do this.”

But mental health care, which is a bipartisan issue, is very likely to dominate the next administration and beyond, Borzi said. As the sole enforcer of ERISA-covered health plans—which is where most people get health coverage—the DOL is in a good spot to ensure that people get the mental health coverage to which they’re entitled, she said. And although the DOL can’t take enforcement actions against insurers, its enforcement and compliance actions against plans have a “ripple effect” on the insurance industry, she said.

Still on the Table

Borzi’s agency had a heavy workload, so she wasn’t able to push everything to completion before she packs up her boxes. So what’s left?

Primarily, the Form 5500 for the 21st Century proposal, which would be the most extensive update of the Form 5500s since the 1970s. “That’s the most important thing on the plate for the incoming person, because the vacuum, the gaps in data, have been remarkable.”

The U.S. isn’t alone in seeking more fine-tuned data, either. More than half of the member states of the Organization for Economic Co-Operation and Development already require or are proposing to require a similar level of granularity, because good policy demands good data, she said.

Enforcement and Compliance

Andrew Puzder, chief executive officer of fast-food company CKE Restaurants Holdings Inc., is likely to take a lighter enforcement approach as secretary of the DOL compared with Perez. But that would be a “mistake,” because part of enforcement is compliance assistance, Borzi said.

“The real problem for my successor is—presuming the person cares about the mission—this whole agency is about participants and beneficiaries. And to the extent we help employers do the right thing, we do that as well.”

She also said she had been mulling what to say in her note for her successor. “My one piece of advice to my successor is going to be rely on and get to know the career staff. People sometimes come in with different views on what the career staff is doing. But they’re all here because they believe in the mission,” as well as to make the boss’s life easier, she said.

To contact the reporter on this story: Sean Forbes in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Pension & Benefits Daily