The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) recently announced a significant update to its national enforcement priorities for fiscal year 2026. Among the most notable changes: Employee Stock Ownership Plans (ESOPs have been removed from the National Enforcement Project (NEP) list.
This represents one of the most meaningful regulatory shifts affecting ESOPs in recent years. Below, we break down what this change means for business owners, ESOP sponsors, and companies considering an ESOP.
Historically, inclusion on the National Enforcement Project list meant that ESOPs were a proactive target for Department of Labor investigations. In many cases, audits were initiated not due to a specific complaint, but because the plan fell within a nationally targeted enforcement category.
What’s changed:
With ESOPs removed from the NEP list, they may no longer face the same level of automatic, targeted scrutiny. While DOL audits can and do still occur, ESOPs are no longer singled out as a national enforcement priority.
What this means for ESOP companies:
This shift suggests a move away from broad, programmatic investigations toward a more balanced, issue-driven enforcement approach.
In its announcement, EBSA emphasized that it is “recalibrating” enforcement efforts to focus on areas that produce the “best results” and prioritize serious misconduct rather than minor foot faults.
EBSA’s new national focus areas include:
Cybersecurity
Mental health and substance use disorder benefits
Surprise medical billing
Protecting benefit distributions
Retirement asset management
Key takeaway for ESOP sponsors:
Even as ESOP-specific scrutiny declines, companies should ensure strong compliance in areas now receiving heightened attention—particularly cybersecurity protections and proper handling of participant distributions.
Although ESOPs were removed as a standalone enforcement category, retirement asset management remains an explicit enforcement priority.
Why this matters:
Core ESOP issues—such as valuation methodology, transaction structure, and independent trustee oversight—can still fall under broader asset management scrutiny.
Bottom line:
This change should not be viewed as a reason to lower standards. Sound valuation practices, independence, and fiduciary discipline remain essential components of a well-structured ESOP.
Overall, the DOL’s 2026 enforcement shift is generally positive for ESOPs. It signals a regulatory environment in which ESOPs are increasingly treated like other qualified retirement plans, rather than as a category warranting heightened suspicion.
At the same time, the message is clear: the DOL expects plan sponsors to maintain strong controls around cybersecurity, plan operations, and distributions.
For business owners considering an ESOP—or companies already operating one—this moment reinforces the importance of thoughtful structuring, disciplined governance, and proactive compliance.
At Business Transition Advisors, we continue to monitor regulatory developments closely and help clients navigate ESOP transactions with clarity, confidence, and long-term success.