The Department of Labor has never been shy about changing its mind, and here we go again. In Advisory Opinion 2025-01A, the DOL rescinded its 2023 advisory opinion that had given some comfort to plan sponsors with racial equity vendor programs. Back then, the DOL had essentially said: if you want to factor in your corporate diversity initiatives when hiring asset managers, you could do that under ERISA without running afoul of your fiduciary duties.
That was then. This is now.
The 2023 Opinion: A Green Light That’s Now Red
The 2023 advisory opinion—which I covered in detail when it came out—looked at a very specific program where the plan sponsor (not the plan) would pick up the tab for some or all of the fees charged by diverse asset managers. In practice, this meant the fiduciaries could look at that subsidy as part of their decision-making process, potentially giving diverse managers an edge in being selected. The DOL said: fair enough. That arrangement, if prudently considered, was consistent with ERISA.
It wasn’t a sweeping blessing of DEI programs in the retirement plan space, but it was a crack in the door. It signaled that ERISA fiduciaries had some leeway to acknowledge the sponsor’s diversity goals without necessarily running afoul of the rules.
The 2025 Opinion: Not So Fast
Fast-forward two years. In Advisory Opinion 2025-01A, the DOL didn’t just reverse course—it tore the old opinion up and threw it out. The Department shifted its focus away from fiduciary analysis under ERISA and zeroed in on the legality of the program itself.
According to the new opinion, the vendor diversity initiative wasn’t just a questionable fiduciary exercise—it was flat-out illegal discrimination under federal civil rights law. That’s a bombshell. The DOL even directed the sponsor to “take immediate action to end all illegal activity” in the program and made it clear that ERISA offers no shield against civil rights violations.
What It Means for Plan Sponsors and Fiduciaries
The message is clear: you can’t hang your hat on the 2023 guidance anymore. It’s gone. If you have a racial equity or vendor diversity program, don’t assume ERISA gives you cover. The first question now isn’t “is this prudent under ERISA?”—it’s “is this legal under federal civil rights laws?”
That’s a threshold issue. If the program itself is unlawful, then there’s no point even talking about fiduciary prudence.
So what should plan sponsors do?
· Reevaluate existing programs. If you have vendor or supplier diversity initiatives tied to your retirement plan, now is the time for a hard look.
· Consult counsel. These issues sit at the intersection of ERISA and civil rights law. That’s not a place for guesswork.
· Don’t rely on outdated guidance. The 2023 opinion has no weight anymore.
My Take
This isn’t about politics—it’s about risk. Plan fiduciaries don’t get to pick and choose which federal laws to follow. If a diversity initiative crosses the line into illegal discrimination, the DOL has made it clear: ERISA won’t save you.
Whether you loved the 2023 opinion or hated it, the takeaway is the same—fiduciary decisions live and die by compliance. And if the underlying program is illegal, you’re already playing in a ballgame you can’t win.
