Employers: Get Ready for Bigger Penalties!


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The federal government has been busy. I know, that seems to be a contradiction in terms. However, the Department of Labor has taken advantage of the summer months to ratchet up employer penalties for violations in a variety of areas, so get ready for increased fines if your business wanders astray of certain laws.

In early July, the DOL announced a series of civil penalty increases associated with wage and hour, safety, and benefits compliance matters (as well as immigration-related violations, which we won’t be discussing here.)

Up at bat first, the FLSA’s civil money penalties will increase for certain violations of the federal Fair Labor Standards Act and related regulations. While the DOL is currently authorized to impose a monetary penalty of up to $1,100 for each repeated or willful violation of minimum wage violation, that penalty will increase by $794, or about 72%, to $1,894. Although the agency has solicited comments regarding the changes by August 15, 2016, the new penalty amounts go into effect on August 1. And, the new penalty amounts actually can be applied to any FLSA violation that occurred after November 2, 2015.

Next up, OSHA’s sizable penalty increases, which I blogged on early this summer. The Occupational Safety and Health Administration will increase its maximum penalties for willful or repeated violations from $70,000 to $124,709, or 78%. Again, like the FLSA schedule above, these penalties can be applied retroactively to ongoing inspections as far back as November 2, 2016 if the citations are ultimately issued after August 1.

Finally, third up and hoping to hit a home run with runners on first and second, the DOL has increased civil penalties issued under the Employee Retirement Income Security Act (ERISA). A number of these ERISA penalties are for the failure of employers to provide information to participants and beneficiaries in their retirement plans. And while some of these increases do not appear as significant as those listed above, they can compound quickly because each day that this information is late to each participant can result in an additional penalty.

For example, failure to furnish reports to certain participants and beneficiaries (such as annual benefit statements) will increase to $28 from $10, while failure to inform single-employer plan participants of funding based limitation of forms of benefit distribution will increase to $1,632 from $1,000.

There are multiple other increased penalties for ERISA violations (importantly, including failure to file required Form 5500’s with the government), but they are too numerous and somewhat complicated to detail here. Suffice to say, work with your financial advisors to ensure that your company is in compliance, and avoid these penalties altogether.

Hilary Atkins
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Posted In: Government, Legal

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