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Regulatory Updates

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ERISA Civil Monetary Penalties

Interim Final Rule Adjusting ERISA Civil Monetary Penalties
No one wants to pay penalties, especially larger penalties. But that’s what is in store for employers who incur ERISA violations. The Department of Labor (DOL) published a new Fact Sheet outlining new ERISA penalties on June 30, 2016. Not only do they increase, but they will be adjusted regularly in the future for inflation. Let’s look at the violations, new penalties and the time of anticipated inflation figures.

The Federal Civil Monetary Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act) required Federal agencies, including the DOL, to adjust their civil monetary penalties for inflation. In 1997 and 2003 the DOL adjusted a number of penalties. In 2015, the “2015 Inflation Adjustment Act” amended the Inflation Adjustment Act and the Office of Management and Budget (OBM) issued implementation guidance under OMB memorandum M-16-06.

The 2015 amendment required federal agencies to issue interim final rules by July 1, 2016, to adjust their monetary penalties for inflation through October of 2015. After this initial “catch-up” adjustment, the agencies must adjust their civil monetary penalties annually for inflation.

The penalties have not been changed or updated in quite some time for inflation. Thus, the rule’s catch-up adjustment applies to penalties assessed after August 1, 2016, for associated violations that occurred after November 2, 2015. Those amounts are shown below.

Beginning in 2017, the Department will adjust the new ERISA Title I 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. Annual inflation adjustments are not subject to notice and rulemaking, and changes will only be posted on the Employee Benefits Security Administration (EBSA) website.  

Below are some common penalties with the new adjusted amounts.

Description of Violation

Old Penalty

New Penalty

Failure or refusal to file a Form 5500
$1,100 per day $2,063 per day
Failure to provide documents and information requested by the DOL $110 per day $147 per day
Failure to provide reports to certain former participants and beneficiaries and failure to maintain records $11 per day $28 per day
Failure by an employer to inform employees of CHIP coverage opportunities $100 per day per employee $110 per day per employee
Violations of the Genetic Information Nondiscrimination Act (GINA), such as establishing eligibility rules based on genetic information or requesting genetic information for underwriting purposes $100 per participant per day $110 per participant per day
Failure to provide annual Summary of Benefits Coverage (SBC) $1,000 per failure $1,087 per failure
Minimum penalty for de minimis failures to meet genetic information requirements not corrected prior to notice from DOL $2,500 $2,745
Minimum penalty for failures that are not de minimis to meet genetic information requirements not corrected prior to notice from DOL $15,000 $16,473


Employers who now operate in compliance with the law do not have to worry about these increases; however, for those not in compliance, the DOL projects the new amounts could result in up to $140 million in additional revenue to the federal government each year.

The penalties create a deterrent effect, which is not only a significant benefit for workers, but also for responsible employers who will have a more level playing field when competing with those who do not follow the law.

Download a copy of this Alert.