We have been putting off answering this question for two reasons: (1) although employer distribution of these notices is central to the Administration’s plan for marketing the Exchanges, the ACA appears to impose no penalty for employer refusal; (2) we would like to see the Labor Department’s proposed rules to evaluate any contention that there is an applicable penalty. Such rules have been repeatedly promised but never issued, and the deadline for distributing the notice is October 1, 2013. Employers need guidance. Here’s our best guess, as of July 15, 2013.
ACA § 1512 added to the Fair Labor Standards Act new section 218B, requiring each employer subject to that minimum wage and overtime law to distribute to all its employees, starting not later than March 1, 2013, under rules written by the Secretary of Labor, a DOL-formatted notice of its coverage offerings and the availability of alternative (perhaps subsidized) coverage through the ACA Exchange serving that state. DOL blew the March 1 deadline for issuing rules and notices, but, in EBSA Technical Release 2013-02 (May 8, 2013), extended the notice distribution deadline to October 1, 2013 and concurrently published the prescribed forms on its web page , along with an amended COBRA notice. Still, eleven weeks in advance of the October 1 deadline, DOL has failed to issue proposed rules.
Neither ACA § 1512 nor any other provision of the ACA appears to impose a penalty for ignoring the FLSA § 218B notice distribution mandate. The FLSA authorizes administrative actions, civil suits and criminal prosecutions for violations of pre-existing FLSA sections, but not for this new one, it seems. We are beginning to suspect that if we were wrong about that, DOL would have issued regulations by now saying so. Unless and until DOL proposes rules that specify a penalty for ignoring new FLSA § 218B, the absence of such a penalty is at least a plausible inference. But there are practicalities to consider.
Given the money and effort about to be expended to advertise the availability of subsidized insurance through the Exchanges, most employers should assume that most employees will receive that information, regardless of employer § 218B compliance. Would you like employees to have accurate information from you, or would you prefer them to act based on unknown information obtained from an organization with adverse interests? Making this choice early, some employers already are arranging for their staffing companies, brokers and TPA’s to serve as Exchange guides for employees who choose that alternative. If you make the same choice, you’ll want to take each opportunity to be, and to appear to be, your employees’ trusted source of ACA information.