The Department of Labor (DOL) issued an interim final rule increasing civil penalties under all the laws it enforces. The increases are authorized by the Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Act).
The interim final rule changes apply to penalties assessed after August 1, 2016, with respect to violations that occurred after November 2, 2015.
Employee Retirement Income Security Act (ERISA)
Penalties have increased both in regard to information to be sent to plan participants as well as for information to be reported to the government. Although the increases seem limited in terms of their actual amount, many of these fines compound daily for each affected participant, which can cause the employer’s overall liability to escalate quickly. Some of the more significant changes:
All ERISA Plans
Failure to furnish reports (e.g., benefit statements) to certain former participants and beneficiaries; failure to maintain records – up from $11.00 to $28.00 per participant.
Failure to provide requested documentation to the Secretary of Labor – up from $110 per day (max. of 10 days) to $147 a day (max. of 10 days).
Failure or refusal to file the Form 5500 Annual Return/Report of Employee Benefit Plan – up from $1,100 a day to $2,063 a day.
Failure to provide notices to participants regarding automatic contribution arrangements – up from $1,000 to $1,632.
Failing to provide requested plan information or information on withdrawal liability upon request – up from $1,000 to $1,632.
Failure to provide blackout notice or notice of right to diversify – up from $110 per day (max. of 10 days) to $131 per day (max. of 10 days).
Failure to inform employees of Children’s Health Insurance Program (CHIP) opportunities – up from $100 from $110.
Failure to provide summary of benefits and coverage (SBC) to affected individuals – up from $1,000 to $1,087..
Failure to comply with genetic information requirements – up from $100 per day to $110 per day.
Failure to meet genetic information requirements where violations are de minimis and not corrected prior to notice from Secretary – up from $2,500 minimum to $2,745 minimum.
Failure to meet genetic information requirements where violations are not de minimis and not corrected prior to notice from Secretary – up from $15,000 minimum to $16,473 minimum.
Cap on unintentional failures to meet genetic information requirements – up from $500,000 maximum to $549,095 maximum.
Fair Labor Standards Act
Maximum per-violation penalty for repeated or willful violations of minimum wage and overtime requirements – up from $1,100 to $1,894.
Violations of child labor restrictions – up from $11,000 for each worker to $12,080.
Violations of child labor restrictions that result in serious injury or death – up from $50,000 to $54,910.
As we predicted last November in a piece entitled OSHA Penalties May Go Up, maximum penalty amounts will increase from the current caps of $7,000 for a “serious” violation and $70,000 for a “willful” or “repeat” violation to $12,471 and $124,701 respectively.
Not to be outdone, the U.S. Department of Justice also issued a final rule regarding penalties for immigration-related violations. These include:
I-9 violations – up from a range of $110 – $1,100 per violation to $216 – $2,156 per violation.
Employment of undocumented workers:
First offense – up from range of $375 – $3,200 to $539 – $4,313.
Subsequent offense – up from maximum of $16,000 to maximum of $21, 563.
Large increases also were implemented for violations of regulations regarding visas.
Compliance has always been important but the coming increase in penalties makes this an excellent time for all employers to review their plans and policies to be sure that you are not among the first to experience increased penalties of the type referenced here.
Who needs that sort of “accomplishment” on their record?