On September 11, 2013, the DOL issued an FAQ announcing that employers cannot be fined or penalized under the law for failing to provide employees with the notice of coverage options available through the health insurance exchanges (exchange notices).

Under Section 18B of the Fair Labor Standards Act (FLSA), added by the Affordable Care Act (ACA), employers must provide all new hires and current employees with a written notice that, among other things:

(See Practice Note, Health Insurance Exchanges and Related Requirements under the ACA: Employer Notice of Exchanges.)

The DOL stated that, under the FLSA, there is no fine or penalty for failing to provide the exchange notices. Despite the lack of penalties for noncompliance, the DOL stated that employers covered by the FLSA should provide the exchange notices to employees by the effective date of October 1, 2013.

Previously, the DOL issued model exchange notices to help employers comply with the requirement (see Legal Update, DOL Issues Model Exchange Notices, Updated COBRA Election Notice and Related Guidance) and clarified that the notices can be distributed by entities other than the employer, including third-party administrators (TPAs), insurers or multiemployer plans (see Legal Update, Exchange Notices, Due October 1, Can Be Distributed by TPAs and Insurers).

Notwithstanding the DOL's position regarding penalties in this FAQ, it's worth noting that the ACA expressly states that employers "shall provide" written exchange notices to employees and it is currently unclear how courts will reconcile the statute's mandatory language with the DOL's position regarding penalties. As a result, cautious employers should consider potential adverse consequences of not providing the exchange notices before deciding not to comply with the requirement.