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DOL Increases Civil Money Penalties for 2019, Effective January 23, 2019
Practical Law Legal Update w-018-5530 (Approx. 14 pages)
DOL Increases Civil Money Penalties for 2019, Effective January 23, 2019
by Practical Law Employee Benefits & Executive Compensation
| Published on 22 Jan 2019 • USA (National/Federal) |
The Department of Labor (DOL) published final regulations that include the agency's 2019 annual inflation adjustments to civil money penalties assessed in its regulations, effective January 23, 2019. The adjustments are required under 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). The final regulations address penalties imposed under the Employee Retirement Income Security Act of 1974 (ERISA), Occupational Safety and Health Act (OSHA), Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Immigration and Nationality Act (INA), among other statutes.
On January 23, 2019, the Department of Labor (DOL) published final regulations containing inflation adjustments to civil money penalties that the DOL administers. The adjustments are required under 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). The Inflation Adjustment Act significantly revised the method for calculating inflation adjustments for penalty increases, including by:
- Providing an initial "catch-up" adjustment for civil money penalties.
- Requiring the DOL to annually adjust the penalties for inflation (under a cost-of-living formula), by January 15 of each year.
In July 2016, the DOL issued interim final regulations establishing an initial catch-up for civil money penalties that the agency administers (see Legal Update, DOL Increases Civil Money Penalties, Effective August 1). This included penalties imposed under the Employee Retirement Income Security Act of 1974 (ERISA), Occupational Safety and Health Act (OSHA), Fair Labor Standards Act (FLSA), and Family and Medical Leave Act (FMLA). The changes affected penalties enforced by:
- The Employee Benefit Security Administration (EBSA) (see EBSA Penalties).
- The Wage and Hour Division (WHD) (see WHD Penalties).
- The Occupational Safety and Health Administration (OSHA) (see OSHA Penalties).
In January 2017, the DOL published final regulations with the DOL's 2017 annual inflation adjustment to its civil money penalties (see Legal Update, DOL Increases Civil Money Penalties for 2017, Effective January 13, 2017).
In January 2018, the DOL published final regulations with the DOL's 2018 annual inflation adjustment to its civil money penalties (see Legal Update, DOL Increases Civil Money Penalties for 2018, Effective January 2, 2018).
Delay Related to Government Shutdown
On January 15, 2019, the DOL released an unofficial, pre-publication version of the 2019 annual inflation adjustment to its civil money penalties. In a press release, the DOL explained that:
- It had made available the unofficial, pre-publication version of the 2019 penalties because the annual adjustments could not be timely finalized due to the government shutdown.
- The unofficial version of the 2019 penalties was for informational purposes only until the official version was published in the Federal Register.
The final regulations were published in the Federal Register on January 23, 2019. (Under the Inflation Adjustment Act, the DOL's annual inflation adjustment must be published by January 15 each year.)
Effective Date of 2019 Annual Adjustments
The final regulations are effective January 23, 2019. As provided by the Inflation Adjustment Act, the increased penalty levels apply to any penalties assessed after this date. This means that the final regulations' higher penalty amounts apply for penalties assessed after January 23, 2019, whose associated violations occurred after November 2, 2015. (The final regulations were not subject to notice-and-comment rulemaking requirements under Section 553 of the Administrative Procedure Act (APA); see Legal Update, Two District Courts Block Enforcement of the Trump Administration's October 2017 Contraceptives Rules: APA Requirements for Administrative Rulemaking.)
The DOL provided a table illustrating which penalty level applies, keyed to when the underlying violation occurred and when the resulting penalty was assessed.
Violations Occurring: | Penalty Assessed: | Applicable Penalty Level: |
On or before November 2, 2015 | On or before August 1, 2016 | Pre-August 1, 2016 levels |
On or before November 2, 2015 | After August 1, 2016 | Pre-August 1, 2016 levels |
After November 2, 2015 | After August 1, 2016, but on or before January 13, 2017 | August 1, 2016 levels |
After November 2, 2015 | After January 13, 2017 but on or before January 2, 2018 | January 13, 2017 levels |
After November 2, 2015 | After January 2, 2018 but on or before January 23, 2019 | January 2, 2018 levels |
After November 2, 2015 | After January 23, 2019 | January 23, 2019 levels |
Adjustment Process and Calculation
The annual adjustment is based on the Consumer Price Index for all Urban Consumers (CPI-U). In general, an adjustment is calculated using the percent change between the:
- October CPI-U preceding the date of the adjustment (here, the October 2018 CPI-U).
- Prior year's October CPI-U (here, the October 2017 CPI-U).
The cost-of-living adjustment multiplier for 2019, based on the CPI-U for October 2018, not seasonally adjusted, is 1.02522. To calculate the 2019 annual adjustment, the DOL multiplied the most recent penalty amount for each applicable penalty by the multiplier, 1.02522, and rounded to the nearest dollar.
Table of Adjusted Penalties for Violations of Select ERISA Requirements
The below table reflects the DOL's 2019 annual inflation adjustments to the civil money penalties for violations of certain requirements under ERISA, effective January 23, 2019.
ERISA Provision | Description of Violation | Maximum 2019 Penalty (As Adjusted) |
ERISA § 209(b) | Failure to furnish certain reports (such as pension benefit statements) or to maintain records | $30 |
ERISA § 502(c)(2) | Failure or refusal to properly file a plan's annual report (Form 5500) | $2,194 |
ERISA § 502(c)(4) | Failure to (i) notify participants of certain benefit restrictions or limitations under Internal Revenue Code (Code) Section 436(f); (ii) for multiemployer plans, (A) provide certain financial and actuarial reports and (B) provide estimates of withdrawal liability; and (iii) furnish automatic contribution arrangement notices (QACA notices) (see Standard Document, Safe Harbor Notice for Qualified Retirement Plans with Optional QACA Provisions) | $1,736 |
ERISA § 502(c)(5) | Failure of a multiple employer welfare arrangement (MEWA) to file an annual report | $1,597 |
ERISA § 502(c)(6) | Failure to provide information requested by the Secretary of Labor under ERISA Section 104(a)(6) | $156 per day, not to exceed $1,566 per request |
ERISA § 502(c)(7) | Failure to provide a required blackout notice and notice of right to divest employer securities (see Standard Document, Blackout Notice) | $139 |
ERISA § 502(c)(8) | Failure of multiemployer plan in endangered status to adopt a funding improvement plan (or if in critical status, a rehabilitation plan) Failure also applies to an endangered status plan (that is not a seriously endangered status plan) that fails to meet its benchmark by end of funding improvement period (see Practice Note, Multiemployer Pension Plans) | $1,378 |
ERISA § 502(c)(9)(A) | Per day failure by an employer to inform employees of CHIP coverage opportunities under ERISA Section 701(f)(3)(B)(i)(l) (each employee a separate violation) | $117 |
ERISA § 502(c)(9)(B) | Per day failure by a plan to timely provide to any state information required to be disclosed under ERISA Section 701(f)(3(B)(ii) (each participant or beneficiary a separate violation) | $117 |
ERISA § 502(c)(10) | Failure by any plan sponsor of a group health plan, or any health insurer offering coverage in connection with the plan, to satisfy ERISA's requirements regarding genetic information (multiple subparts) (see Practice Note, GINA Compliance for Health and Welfare Plans) | $117 $2,919 $17,515 $583,830 |
ERISA § 502(c)(12) | Failure of a Cooperative and Small Employer Charity (CSEC) plan sponsor to establish or update a funding restoration plan | $107 |
ERISA § 502(m) | Prohibited distribution under ERISA Section 206(e) | $16,915 |
ERISA § 715 | Failure to provide required Affordable Care Act (ACA) summaries of benefits and coverage (SBCs) (Section 2715 of the Public Health Service Act; 42 U.S.C. § 300gg-15) (see Practice Note, Summaries of Benefits and Coverage Under the ACA) | $1,156 |
Table of Adjusted Penalties for Violations of Select WHD Requirements
The below table reflects the DOL's 2019 annual inflation adjustments to the civil money penalties for violations of certain requirements under WHD enforcement authority, effective January 23, 2019.
Statute/Regulation | Description of Violation | 2019 Penalty (As Adjusted) |
Violation of MSPA or any of its regulations | $2,505 | |
INA, INA § 218(g)(2) (8 U.S.C. § 1188(g)(2)); 29 C.F.R. § 501.19(c) | Violation of work contract or of H-2A visa program's statutory or regulatory requirements | $1,735 |
INA, INA § 218(g)(2) (8 U.S.C. § 1188(g)(2)); 29 C.F.R. § 501.19(c)(1) | Willful violation of work contract or of H-2A visa program's statutory or regulatory requirements, or for each act of discrimination prohibited by Section 501.4 | $5,839 |
INA, INA § 218(g)(2) (8 U.S.C. § 1188(g)(2)); 29 C.F.R. § 501.19(c)(2) | Violation of housing or transportation safety and health provision of work contract or of H-2A visa program's statutory or regulatory requirements that proximately causes worker's death or serious injury | $57,813 |
INA, INA § 218(g)(2) (8 U.S.C. § 1188(g)(2)); 29 C.F.R. § 501.19(c)(4) | Repeat or willful violation of housing or transportation safety and health provision of work contract or of H-2A visa program's statutory or regulatory requirements that proximately causes worker's death or serious injury | $115,624 |
INA, INA § 218(g)(2) (8 U.S.C. § 1188(g)(2)); 29 C.F.R. § 501.19(d) | Failure to cooperate with WHD investigation into H-2A violation | $5,839 |
INA, INA § 218(g)(2) (8 U.S.C. § 1188(g)(2)); 29 C.F.R. § 501.19(e) | Laying off or displacing a US worker employed under circumstances specified in Section 501.19(e) | $17,344 |
INA, INA § 218(g)(2) (8 U.S.C. § 1188(g)(2)); 29 C.F.R. § 501.19(f) | Improperly rejecting a US worker applicant for employment in violation of the H-2A visa program's statutory or regulatory requirements | $17,344 |
INA, INA § 258(c)(4)(E)(i) (8 U.S.C. § 1288(c)(4)(E)(i)); 20 C.F.R. § 655.620(a) | Violation of D-1 visa program involving crewmembers for longshore activities in US ports | $9,472 |
INA, INA § 212(n)(2)(C)(ii) or (t)(3)(C)(ii) (8 U.S.C. § 1182(n)(2)(C)(ii) or (t)(3)(C)(ii)); 20 C.F.R. § 655.801(b) | Retaliation for supplying information or cooperating with investigation of employer's compliance with INA | $7,710 |
INA, INA § 212(n)(2)(C) (8 U.S.C. § 1182(n)(2)(C)); 20 C.F.R. § 655.810(b)(1) | Violation of H-1B visa program | $1,895 |
INA, INA § 212(n)(2)(C) (8 U.S.C. § 1182(n)(2)(C)); 20 C.F.R. § 655.810(b)(2) | Willful violation of H-1B visa program or discrimination against an employee | $7,710 |
INA, INA § 212(n)(2)(C) (8 U.S.C. § 1182(n)(2)(C)); 20 C.F.R. § 655.810(b)(3) | Willful violation that displaced a US worker within 90 days before and 90 days after an H-1B petition was filed | $53,969 |
Violation related to homeworkers – recordkeeping | $1,052 | |
Employment of homeworkers without a certificate | $1,052 | |
Repeat or willful violation of FLSA minimum wage and overtime requirements | $2,014 | |
Violations of FLSA child labor provisions or regulations | $12,845 | |
Violations of FLSA child labor provisions or regulations that cause death or serious injury to an employee under age 18 | $116,766 | |
Violation of EPPA or of part 801 | $21,039 | |
Violation of FMLA posting requirement | $173 |
Table of Adjusted Penalties for Violations of Select OSHA Requirements
The below table reflects the DOL's 2019 annual inflation adjustments to the civil money penalties for violations of certain requirements under OSH Act, effective January 23, 2019.
Statute/Regulation | Description of Violation | 2019 Penalty (As Adjusted) |
Repeated or willful violation of OSH Act Section 5, rules or orders under OSH Act Section 6, or applicable regulations | $132,598 | |
Serious violation of OSH Act Section 5, rules or orders under OSH Act Section 6, or applicable regulations | $13,260 | |
Other-than-serious violation of OSH Act Section 5, rules or orders under OSH Act Section 6, or applicable regulations | $13,260 | |
Failure to correct a violation of OSH Act | $13,260 | |
Violation of OSH Act posting requirement | $13,260 |
Practical Implications
The DOL's 2019 inflation adjustment is the third annual adjustment published by the DOL following review of the agency's civil penalties under the Inflation Adjustment Act.
As with previous adjustments, practitioners must be aware of the increased penalties under the final regulations to properly advise clients on their potential liability for violations of the statutes or regulations impacted by the Inflation Adjustment Act.