Since the Federal Civil Penalties Inflation Adjustment Act was first passed in 1990, federal organizations including the Department of Labor have had to make certain changes to industry standards and penalties. These yearly adjustments ensure that civil penalties, like the kind imposed on employers through the DOL, are effective deterrents and that their amount is consistent with inflation levels.
According to the most recently available data, 2017 experienced a 2.11 percent consumer price index inflation in the U.S., a small increase over the 2.07 percent seen in 2016 and a larger rise compared to the 0.7 percent inflation rate seen in 2014 and 2015.
In January, the DOL released its updated maximum civil penalty amounts, imposed according to major laws, which, in accordance with current inflation, reflect an approximately 2 percent increase over last year's penalty amounts.
What laws and standards are impacted?
As the information released by the DOL and other federal organizations states, the civil monetary penalty adjustments impact an array of different laws, including the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), standards from the Occupational Safety and Health Administration, the Employee Retirement Income Security Act and other regulations.
This chart from legal firm Baker Donelson lists the associated, adjusted civil penalty amounts that will now come with certain violations of FLSA, FMLA, employee benefits administration standards and OSHA guidelines.
Employers will now face higher penalties for violating federal Department of Labor laws. Some of the most important increases for employers to be aware of include:
- FLSA: Employers that repeatedly or willfully violate minimum wage and/or overtime requirements can now be fined up to $1,964 per each identified violation.
- FMLA: Employers who willfully fail to post FMLA general notice to inform employees of their rights under the standard can be fined up to $169.
- OSHA: Employers that violate OSHA standards, including failing to post notices and other serious violations, must pay up to $12,934 for each violation instance. What's more, a failure to correct these violations now carries a penalty of up to $12,934 for each day it takes to address the issues.
Increasing penalties related to employee benefits
Employers should be especially aware of the rising monetary consequences that now come with violations of ERISA and employee benefits standards. This encompasses violations and increased penalties for:
- Not filing Form 5500 for annual reporting, resulting in a fine of up to $2,140 each day.
- Not filing employer welfare arrangement annual reports, which now carries a penalty of $1,558 each day.
- Not posting benefits plan-related information directly requested by the DOL, which includes a fine of $157 per day.
- Not providing 401(k) blackout notice, or notice of right to divest employer securities for employees, resulting in penalties of $136 per day.
- Not providing Summary of Benefits and Coverage for employees, where employers can be fined as much as $1,128 per instance.
Other increases come in association with violation of child labor laws, migrant and seasonal agricultural worker protections, immigration and nationality standards and contract work and overtime requirements.
Bottom line: Why is this important for employers?
As certain fines are increasing according to issues that are particularly simple to address – including that the correct information is posted and available to employee – it's imperative that employers take the time to review their accessible materials and ensure that everything is in line.
Overall, these fines and penalties help support protections for the workforce as well as for employers, and serve as deterrents to prevent missteps and ensure safe and healthy working environments.
To find out more about how this might impact your company's benefits administration or human resources processes, connect with the experts at Triton Benefits & HR Solutions today.