DOL Audits Surge 34%
Is Your Plan Ready?
The Department of Labor isn't taking prisoners anymore. DOL audits jumped 34% in 2024, slapping employers with $252 million in penalties.For companies managing self-funded benefit plans, this enforcement surge signals a fundamental shift.The numbers tell the story: the DOL has moved from selective enforcement to systematic scrutiny. Your plan will likely face an audit—the only question is whether you'll survive it with your finances intact. This guide reveals what triggers DOL attention, where auditors focus their efforts, and how smart employers protect themselves before problems emerge.
What Triggers a DOL Audit?
Most audits aren't random fishing expeditions. They stem from specific red flags that signal compliance problems to DOL investigators.
Employee Complaints Drive Action
Employee complaints remain the top audit trigger. When participants file grievances about denied claims, delayed payments, or missing plan information, the DOL responds fast. These complaints create a domino effect—one frustrated employee often uncovers systemic issues affecting your entire plan.Social media amplifies this risk dramatically. Employees now broadcast benefit frustrations publicly, creating pressure for immediate DOL action.
Form 5500 Filing Failures
Late or incorrect Form 5500 filings create immediate redflags. The DOL actively monitors these submissions using automated systems.Common triggers include:
- Missing filing deadlines
- Incorrect participant counts
- Inconsistent financial data
- Missing required schedules
Plans with 100+ participants face heightened scrutiny because the DOL expects sophisticated compliance systems at this scale.
Suspicious Financial Patterns
The DOL's analytics now identify unusual patterns indicating potential violations:
- Dramatic fluctuations in administrative expenses
- Large loans between plans and sponsors
- Unusual investment allocations
- Benefit payment discrepancies
2025 Audit Focus Areas
The DOL has telegraphed its enforcement priorities, focusing on areas causing the most participant harm.
Claims Administration Oversight
Claims processing tops the DOL's priority list. Auditors examine whether employers properly oversee third-party administrators. Key scrutiny areas include:
- Processing timeframes and ERISA compliance
- Denial rates and appeals procedures
- TPA fee arrangements and conflicts
- Vendor oversight documentation
Many employers mistakenly believe their TPA handles all compliance. ERISA makes plan sponsors ultimately liable for administrativefailures.
Fiduciary Training
The DOL expects plan fiduciaries to understand their responsibilities and document decisions. Auditors routinely request:
- Fiduciary training records
- Committee meeting minutes
- Major decision documentation
- Vendor selection evidence
Participant Communication
Communication failures generate substantial penalties. Common violations include:
- Missing Summary Plan Descriptions
- Late COBRA notices
- Inadequate claims denial explanations
- Outdated plan documents
Real Audit Consequences
These examples illustrate how quickly audits escalate and the severe consequences of compliance failures.
The Documentation Disaster
A 150-employee manufacturer faced routine audit that became catastrophic when they couldn't produce complete records after switching TPAs. Missing three years of claims data created presumption of violations.
Result: $180,000 penalties, $75,000 legal fees, plus $120,000 for mandatory monitoring.
The Training Failure
A 300-employee firm discovered during audit that no committee members had received fiduciary training. The DOL found systematic breaches including improper fee arrangements.
Penalties totaled $275,000 with personal liability for committee members.
How Fox Everett Protects Your Plan
Our boutique approach means dedicated expertise keeping your plan audit-ready through proactive monitoring.
Proactive Compliance Monitoring
We don't wait for problems. Our system tracks key indicators and identifies issues before they trigger audits. Monthly reviews examine processing times, communication deadlines, and documentation requirements.
Expert Fiduciary Support
Our team includes certified specialists and former DOL attorneys understanding audit procedures from both perspectives. We provide comprehensive training and establish robust committee structures with clear documentation standards.
Audit Response Expertise
When audits occur, our experience minimizes penalties. We've guided clients through dozens of investigations, helping present cases effectively and reduce exposure.
Schedule Your Risk Review
DOL enforcement will intensify throughout 2025. Fox Everett's Compliance Risk Review evaluates your audit readiness, examining documentation practices, fiduciary procedures, and vendor oversight to identify vulnerabilities. Contact Fox Everett today to discover why mid-market employers trust our boutique expertise for audit protection.
