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Department of Labor Announces Increases to ERISA Noncompliance Penalties

July 12, 2016

Overview

Department of Labor   Announces Increases to ERISA Noncompliance Penalties

On   June 30, 2016, the Department of Labor (the "Department") announced   that various civil monetary penalties, including those pertaining to ERISA   reporting and disclosure violations, will be increased to account for   inflation. The increases are prompted by the Federal Civil Monetary Penalties   Inflation Adjustment Act of 1990 (the "Inflation Adjustment Act").   This law requires federal agencies, including the Department, to adjust their   civil monetary penalties for inflation. Additionally, 2015 amendments to the   Inflation Adjustment Act require federal agencies to adjust their civil   monetary penalties for inflation through October of 2015. After this initial   "catch-up" adjustment, the agencies must adjust their civil   monetary penalties annually. Beginning in 2017, the Department will adjust   the new penalty amounts annually for inflation no later than January 15 of   each year. For example, by January 15, 2017, the Department will adjust   penalty amounts to reflect any increase in inflation from October 2015 to   October 2016. The table below shows, for key ERISA violations, the current   penalty amounts, and the 2016 inflation-adjusted penalty. The catch-up   adjustments apply to penalties assessed after August 1, 2016.

                                                                                                                                               
   

ERISA     Violation

   
   

Current     Maximum Penalty Amount

   
   

New     Maximum Penalty Amount

   
   

Late     filing of Form 5500 annual report.

   
   

$1,100     per day

   
   

$2,063     per day

   
   

Failure     of a multiple employer welfare arrangement (“MEWA”) to file Form M-1 annual     report.

   
   

$1,100     per day

   
   

$1,502     per day

   
   

Failure     to furnish information requested by Department.

   
   

$110     per day, not to exceed $1,100 per request

   
   

$147     per day, not to exceed $1,472 per request

   
   

Failure     to furnish a “blackout notice” or notice of the right to divest employer     securities.

   
   

$100     per day

   
   

$131     per day

   
   

Failure     by an employer to inform employees of Children’s Health Insurance Program     (“CHIP”) coverage opportunities (each employee a separate violation).

   
   

$100     per day

   
   

$110     per day

   
   

Failure     to comply with the HIPAA portability rules.

   
   

$100     per day during noncompliance period

   
   

$110     per day during noncompliance period

   
   

Failure     to provide a Summary of Benefits and Coverage (“SBC”).

   
   

$1,000     per failure

   
   

$1,087     per failure

   

For further information or questions regarding the inflation-adjusted ERISA penalties, please contact the Schwabe attorney with whom you work or Wally Miller.

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