March 16, 2017

DOL Increases Civil Penalties for Inflation

The Department of Labor (DOL) issued a final rule increasing civil penalties under all the laws it enforces, including the Employee Retirement Income Security Act (ERISA). The increases are pursuant to the Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Act). The Inflation Act requires federal agencies to make an annual inflation-based adjustment to their civil monetary penalties.

The increases in the final rule, which are based on inflation from October 15, 2015 to October 15, 2016, apply to penalties assessed after January 13, 2017, with respect to violations that occurred after November 2, 2015.

The first chart below lists penalties for both pension and health plans that violate ERISA. The second chart reports penalties for pension plans. The third chart reports penalties for health plans. Because of prior inflation adjustments to some penalties and differing rounding rules, the adjustment percentage varies by penalty.

Penalties Related to Both Pension and Health Plans
ERISA Penalty Section	ERISA Violation	2016 Penalty	2017 Penalty
ERISA §502(c)(2)	Failure or refusal to file annual report (Form 5500) under §104	Up to $2,063 per day	Up to $2,097 per day
ERISA §502(c)(6)	Failure to furnish information (documents related to plan) requested by Secretary under §104(a)(6)	Up to $147 per day, not to exceed $1,472 per request	Up to $149 per day, not to exceed $1,496 per request

Penalties Related Exclusively to Pension Plans
ERISA Penalty Section	ERISA Violation	2016 Penalty	2017 Penalty
ERISA §209(b)	Failure to furnish reports (e.g., benefit statements) to certain former participants and beneficiaries; failure to maintain records	Up to $28 per participant	Up to $28 per participant
ERISA §502(c)(4)	Failure to furnish certain multiemployer financial and actuarial reports upon request under §101(k); failure to furnish estimate of withdrawal liability upon request under §101(l); failure to furnish automatic contribution arrangement notice under §514(e)(3)	Up to $1,632 per day	Up to $1,659 per day
ERISA §502(c)(7)	Failure to furnish blackout notice under §101(i); failure to furnish notice of right to diversify under §101(m) (for “applicable individual account plans”)	Up to $131 per day	Up to $133 per day

Penalties Related Exclusively to Pension Plans
ERISA Penalty Section	ERISA Violation	2016 Penalty	2017 Penalty
ERISA §209(b)	Failure to furnish reports (e.g., benefit statements) to certain former participants and beneficiaries; failure to maintain records	Up to $28 per employee	Up to $28 per employee
ERISA §502(c)(4)	Failure to notify participants of certain benefit restrictions under §101(j); failure to furnish automatic contribution arrangement notice under §514(e)(3)	Up to $1,632 per day	Up to $1,659 per day
ERISA §502(c)(7)	Failure to furnish blackout notice under §101(i); failure to furnish notice of right to diversify under §101(m) (for “applicable individual account plans”)	Up to $131 per day	Up to $133 per day
ERISA §502(m)	Distribution of amount prohibited under §206(e) because of liquidity shortfall	Up to $15,909 per distribution	Up to $16,169 per distribution

Penalties Related Exclusively to Health Plans
ERISA Penalty Section	ERISA Violation	2016 Penalty	2017 Penalty
ERISA §715	Failure to provide Summary of Benefits and Coverage (SBC)	Up to $1,087 per failure	Up to $1,105 per failure
ERISA §502(c)(9)(A)	Failure to inform employees of CHIP coverage opportunities	Up to $110 per day	Up to $112 per day
ERISA §502(c)(9)(B)	Failure to timely provide to requesting state information relevant to coordinating group coverage with Medicaid or CHIP	Up to $110 per day	Up to $112 per day
ERISA §502(c)(10)(B)(i)	Failure to comply with genetic information requirements	$110 per day during non-compliance period	$112 per day during non-compliance period
ERISA §502(c)(10)(C)(i)	Minimum penalty for failure to meet genetic information requirements where violations are de minimis and not corrected prior to notice from Secretary	$2,745 minimum	$2,790 minimum
ERISA §502(c)(10)(C)(ii)	Minimum penalty for failure to meet genetic information requirements where violations are not de minimis and not corrected prior to notice from Secretary	$16,473 minimum	$16,742 minimum
ERISA §502(c)(10)(D)(iii)(II)	Cap on unintentional failures to meet genetic information requirements	$549,095 maximum	$558,078 maximum