On January 15, 2026, the Department of Labor’s Employee Benefits Security Administration (EBSA) made a quiet but consequential change: Employee Stock Ownership Plans were removed from the agency’s national enforcement priorities.
For years, ESOP sponsors, trustees, lenders, and advisors have navigated a regulatory landscape marked by prolonged investigations and shifting valuation expectations. EBSA’s recalibration signals a shift toward proportionality and predictability,
This is not a retreat from fiduciary rigor but a meaningful reset in how oversight is applied.
What Changed and Why It Matters
Under EBSA’s revised FY 2026 enforcement framework, agency resources are being redirected to areas of demonstrably higher participant risk, including cybersecurity, benefit distribution failures, and retirement asset mismanagement. ESOPs are notably absent.
Deputy Secretary of Labor Keith Sonderling captured the intent succinctly; enforcement should target serious misconduct, not minor technical missteps.
For ESOP companies, this translates into fewer investigations triggered solely by plan structure, more predictable transactions, and clearer environment for long-term planning.
This shift did not happen in isolation. Congressional scrutiny throughout 2025, paired with bipartisan support for employee ownership, pushed for greater transparency and accountability around EBSA’s enforcement practices.
What This Means for ESOP Companies
From our perspective, advising ESOP companies and operating as one, this moment changes the regulatory tone but not the underlying fundamentals: fiduciary discipline, fair market value, prudent process, and thorough documentation remain essential.
- Fiduciary discipline still matters: ESOPs are still governed by ERISA. Fair market value, prudent process, and thorough documentation continue to be non-negotiable.
- What’s changing is uncertainty: The reduced emphasis on enforcement-by-investigation allows companies to focus less on regulatory defense and more on governance, performance, and employee value creation.
- Deal execution and financing should improve: Lenders and trustees closely monitor the regulatory posture. A more measured regulatory environment supports smoother underwriting, clearer trustee decision-making, and fewer transactions stalled by perceived regulatory risk.
- Timing matters: Business owners who delayed succession planning due to regulatory headwinds may find 2026 a more favorable alignment of policy, market conditions, and regulatory tone.
Even in a recalibrated environment, strong ESOPs are built on disciplined execution:
- Independent, well-supported valuations
- Clearly defined fiduciary roles and governance structures
- Ongoing compliance reviews, not just transaction-driven checklists
- Alignment between management, trustees, and employee-owners
At Grassi, our ESOP advisory work spans feasibility analysis, transaction support, valuation oversight, ongoing compliance, and post-transaction optimization. This comprehensive approach is critical, as regulatory pressure may vary, but a strong process is what sustains ESOPs for decades, not just at closing.
What This Signals for Employee Ownership
As an employee-owned firm, Grassi understands that ESOPs are more than a transaction structure. They are an operating model that requires transparency, accountability, and long-term thinking.
EBSA’s recalibration reinforces a long-standing truth: employee ownership is not a loophole. It is a deliberate policy choice with broad bipartisan support.
This shift doesn’t eliminate risk, but it restores balance. And for ESOP companies willing to pair opportunities with discipline, that balance creates room to grow.
A Moment for Reassessment
For ESOP sponsors, boards, and business owners, now is the time to reassess strategy. A more predictable regulatory environment rewards organizations that combine strong governance with forward-looking planning.
