DOL Adjusts ERISA Penalties for Inflation
On January 11, 2024, the Department of Labor announced annual increases to penalty amounts, including those that apply for failure to comply with ERISA.
Background: Department of Labor Audits
In 2012, the Department of Labor announced a renewed commitment to increase the number of ERISA compliance audits it conducts each year. Since that time, EBSA has increased their staff and the number of audits they perform each year has been on the rise.
During an audit, the DOL will review requirements related to laws such as ERISA, HIPAA, and the Affordable Care Act. For example, the DOL will verify that a summary plan document exists, wellness plans comply with HIPAA, and that special enrollment rights have been provided to employees when appropriate.
ERISA rules are enforced by the Employee Benefits Security Administration (EBSA), which has the authority to issue monetary penalties to organizations which are out of compliance.
Penalties assessed after January 15, 2024 for violations which occurred after November 2, 2015 will be at the newly published rates.
One minor but important change resulting from the Inflation Adjustment Act is the requirement that the penalties for ERISA non-compliance are adjusted annually for inflation. This is designed so that monetary penalties continue to serve as a deterrent to employers.
The increase in penalties reinforces the importance of remaining compliant with ERISA rules. With increased audits by the EBSA, now is a good time to review your plans to make sure you are in full compliance. If you have questions or concerns, we encourage you to contact your M3 client team for guidance on this topic.
The information provided is a summary of laws and regulations relating to employee benefit plan compliance. This information should not be construed as legal advice. In all cases, employers should consult with their own legal counsel.