Since it was signed into law in March 2010, the Patient Protection and Affordable Care Act, or “ACA,” has been a focus of national attention. While most have zeroed in on the employer mandate to provide health insurance, there are many other important changes, including to the FLSA. In this post, we focus on how ACA amended the FLSA and what those changes mean for employers.
Auto-Enrollment. ACA added new Section 18A to the FLSA, which requires employers covered by the FLSA that have more than 200 full-time employees to automatically enroll new full-time employees in one of the employer’s offered health plans (if any). Employees must also receive an opportunity to “opt out.” In February 2012, the DOL indicated this requirement will not be enforced until regulations are issued. It remains uncertain when this mandate will become effective.
- Implications: If they have not done so already, employers should begin considering increased participation costs as a result of auto-enrollment. Employers could use defined contribution auto-enrollment attrition rates in considering how many employees will opt out of the benefit.
Exchange Notice. ACA also introduced Section 18B to the FLSA, which requires employers covered by the FLSA to distribute notice to employees of their coverage offerings and the availability of alternative coverage through the ACA Exchange serving that state. In an informal FAQ posted in September, the DOL confirmed there is no penalty or fine for failing to provide notice. That said, Section 18B’s language is mandatory, not permissive, and it remains to be seen what consequences, if any, might result from non-compliance.
- Implications: The notice was required to be distributed to existing employees by October 1, 2013. Employers that have not yet distributed notice should seriously consider doing so.
Anti-Retaliation. ACA added Section 18C to the FLSA, which includes retaliation protections related to ACA requirements. Employers may not discriminate against or fire an employee because he or she received a tax credit or subsidy for enrolling in a qualified health plan, objected to an activity or practice he or she believed was an ACA violation, or assisted in an investigation regarding a violation.
- Implications: Beginning in 2015, employers may be subject to a penalty for failing to offer coverage for full-time employees and their dependents (i.e., the no-coverage penalty). This penalty is only triggered if an employee receives a tax credit or subsidy. The anti-retaliation rules appear to protect employees who do so, thereby causing their employer to become subject to the penalty. Employers should review their anti-retaliation policies to ensure these changes are covered.
Lactation Breaks. Finally, ACA amended the FLSA to require employers to provide nursing mothers with reasonable breaks and a private, non-bathroom area to express breast milk. The requirement applies to all employers covered by the FLSA, with a narrow exception for those with fewer than 50 employees. The DOL has suggested two or three lactation breaks per 8-hour shift may be reasonable. There is no requirement that the breaks be paid, but a mother who uses a paid break to express milk must be paid the same as others for that time, and the same is true for unpaid breaks that are interrupted or cut short.
- Implications: Employers should review their policies and practices regarding nursing mothers to ensure compliance with this requirement . If they have not done so already, they should identify a private, non-bathroom space that can be used for lactation breaks, develop and distribute a written and compliant policy, and train managers and supervisors about the requirements.
As readers of this blog know, the FLSA has been a magnet for litigation over the past decade. Its amendment by legislation as highly-publicized as ACA may cause some plaintiffs’ attorneys to attempt to expand their arsenals of FLSA claims to assert against employers. For this reason and many others, employers would be well served to ensure that they understand these changes and have accounted for them in their policies, procedures, and everyday practices.