Fifth Circuit Rules That Obama-Era Labor Department Exceeded Its Authority in Promulgating Controversial “Fiduciary Rule”

A divided three-judge panel of the U.S. Court of Appeals for the Fifth Circuit has struck down the controversial “fiduciary rule” that the Department of Labor (DOL) enacted in 2016 during the last year of the Obama Administration.

The ruling by the appeals court in Chamber of Commerce of the United States of America v. U.S. Department of Labor, No. 17-10238 (5th Cir. March 15, 2018) concludes that DOL overstepped its statutory boundaries under the Employee Retirement Income Security Act (ERISA) in issuing the rule, observing that “When agencies within the Executive Branch defy Congressional limits, they lord it over the people without proper authority.”

The decision is an important one because it discusses in depth the standards to be applied when an agency regulation or legal interpretation is challenged as being overly broad, inconsistent with the underlying statute, or otherwise beyond the agency’s statutory authority. Here, the Fifth Circuit concluded DOL’s actions in promulgating the rule were “unreasonable and arbitrary and capricious.”

The Fifth Circuit’s decision is available here.

Members of the Center for Workplace Compliance (CWC) can read more here.