DOL drastically hikes penalties for failures to meet notice, genetic information requirements

The Department of Labor (DOL) has issued an interim final rule to adjust the amounts of civil penalties assessed or enforced under its regulations. Those adjustment amounts pertain to regulations enforced by the DOL’s EBSA, Wage and Hour Division, OSHA, and other agencies. In conjunction with the interim final rules, the DOL has issued a fact sheet and a list of each agency’s penalty adjustments.

Inflation Adjustment Act. The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act), requires that agencies adjust civil monetary penalties with an initial catch-up adjustment, followed by annual adjustments for inflation no later than January 15 of each year. The catch-up calculation and subsequent annual adjustments must be based on the Consumer Price Index for all Urban Consumers. The DOL was required to publish its interim final rules by July 1, 2016, with new penalty levels effective no later than August 1, 2016.

Adjustments enforceable by EBSA. The increases in penalty amounts are substantial, especially for failures to meet genetic information requirements. For example, the cap on unintentional failures to meet genetic information requirements is now $549,095, up from $500,000. Some of the other current and adjusted penalty amounts enforceable by the EBSA are as follows:

• For the failure to furnish reports such as pension benefit statements to certain former participants and beneficiaries or to maintain records, up to $28 per employee, up from $11;

• For the refusal to file Form 5500 and the failure of a multiemployer plan to certify endangered or critical status, as treated as failure to file an annual report, up to $2,063 per day, up from $1,100;

• For the failure to either notify participants of certain benefit restrictions and/or limitations under Code Sec. 436, furnish certain multiemployer plan financial or actuarial reports on request, furnish an estimate of withdrawal liability upon request, or furnish an automatic contribution arrangement notice, up to $1,632 per day, up from $1,000;

• For the failure of a multiple employer welfare arrangement to file a report as required by regulations under ERISA Sec. 101(g), up to $1,502 per day, up from $1,100;

• For de minimis failures to meet genetic information requirements not corrected prior to a notice from the Secretary of Labor, a minimum of $2,745, up from $2,500;

• For failures to meet genetic information requirements which are not de minimis and which are not corrected prior to a notice from the Secretary of Labor, a minimum of $16,473, up from $15,000; and

• For the failure to provide a Summary of Benefits and Coverage, up to $1,087 per failure, up from $1,000.

FMLA penalty adjustments. Section 109(b) of the FMLA, as amended, and existing 29 CFR 825.300(a)(1) provide for assessment of a civil money penalty for each willful violation of the FMLA’s posting requirement. This penalty has increased from $110 to $163 for each separate offense. In a press release, the DOL acknowledged that OSHA maximum penalties, which have not been raised since 1990, are increasing by 78 percent. Comments on both interim final rules must be submitted within 45 days following publication in the Federal Register.

SOURCE: EBSA Fact Sheet, June 30, 2016.

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