With 20% staff cut, Department of Labor priorities changing fast, analysts say

Staffing at the Employee Benefit Security Administration is down substantially so far in the Trump administration and new leader Daniel Aronowitz has creative plans for the Labor Department agency.

That will mean a new approach to decisions on lingering issues such as fiduciary status and environmental, social, and governance [ESG] investing. The Senate confirmed Aronowitz in late September as assistant secretary of labor in charge of the EBSA.

EBSA is responsible for enforcing the Employee Retirement Income Security Act of 1974 [ERISA] and, therefore of great interest to the financial services industry.

Aronowitz will have no choice but to be creative in his administration of the agency, agreed Brad Cambell and Fred Reish, partners with Faegre Drinker Biddle & Reath, in their latest Inside the Beltway webinar.

For starters, he will be managing a lighter department. Dozens of employees were trimmed from EBSA as Trump and Elon Musk sought to downsize the federal government during the early days of the new administration, Reish noted.

“I think it will have its intended effect in the sense that the agencies will have to rethink how to do things and examine whether they can be more efficient,” Reish said, adding that things are likely to return to normal, likely after this administration. “I think it's counterproductive, and that they've lost a lot of the people who really understood the agency's mission, how things are accomplished.”

Campbell, who ran EBSA for a short time under President George W. Bush, said the administration is “intentionally” breaking things so they can reform the department.

“There is a lot of institutional knowledge that leaves, but it is going to create the opportunity to build something new,” he said. “I think the big question for the Trump administration is, will they be able to build something new? And how good will it be?”

The difference is already being felt in the number of civil cases the DOL is closing. In 2010 they were closing over 3,000 a year, Campbell said, with the number of cases dropping ever since. Last year, the department closed 729 cases, and that's before any substantial changes to staffing or overall funding.

Another swipe at ESG

The DOL has attempted multiple times to regulate the consideration of ESG factors in retirement plan investments under ERISA. Beginning under the Obama administration, guidance allowed fiduciaries to consider ESG factors when they were financially relevant.

The Trump administration largely rolled back these guidelines, emphasizing that plan investments must prioritize financial returns over non-financial objectives. Under the Biden administration, the DOL has sought to clarify rules to allow ESG integration without violating fiduciary duties, but these efforts have faced legal challenges.

The current Trump administration has again placed ESG on the regulatory agenda, scheduled for May 2026.

"I suspect it'll be rescinding the old rule, notice and comment rule-making on a new rule," Campbell said.

Labor officials chase fiduciary

Meanwhile, the DOL effort to extend fiduciary duty remains alive, if on life support. Various fiduciary efforts have been in and out of courts since the Obama administration published its fiduciary rule in 2016.

The latest version – the Biden administration’s Retirement Security rule – was stayed last year by two different courts. For most of 2025, the Trump administration asked the court for repeated extensions while it decides its next steps with the rule. But the Fifth Circuit Court of Appeals is running out of patience, Campbell said, and holding the parties to a stricter briefing schedule.

It is highly unlikely that the RSR survives in anything resembling its current form, Campbell acknowledged, but he reminded listeners that the first Trump administration Labor Department did publish a tough rule in 2020 that was met with a civil lawsuit from industry.

“I don't think there's a snowball's chance that regulation is going to survive the Trump administration," Reish said. "I think we can kiss the Biden-era fiduciary regulation goodbye, take it out of our memory banks and get on with life."

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