Quick Reminder to FLSA-Covered Employers: Distribute ACA Exchange Notices to Employees by October 1st

The Department of Labor has issued temporary guidance outlining the requirements of the notice provision that the Affordable Care Act (ACA) added to the Fair Labor Standards Act (FLSA).

Under FLSA Section 18B, employers must distribute notices announcing the existence of the Health Insurance Marketplace (i.e., the “Exchanges”) created by Health Reform, and explaining the effect of an employee’s participation in the marketplace on his or her own health benefits. The notices must go out to current employees either by first class mail or electronically no later than October 1st, and must be provided to new hires within 14 days of the new employee’s start date. See 29 CFR § 2520.104b-1(c) for details on the DOL’s electronic disclosure safe harbor provision.

Employers covered by the FLSA must comply with the notice provision. As a brief refresher, the FLSA applies to employers that employ one or more employees who “are engaged in, or produce goods for, interstate commerce,” a description encompassing most commercial activities.  Additionally, most employers’ annual business volume must also meet at least $500,000 for the FLSA to apply.

The FLSA also specifically covers certain entities regardless of annual business volume: hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies.

The DOL requires that notices must cover the following points:

  • Inform employees of the existence of the Exchanges, including a description of the services provided by the Exchanges, and the manner in which the employee may contact the Exchanges to request assistance;
  • If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of such costs, that the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Exchanges; and
  • If the employee purchases a qualified health plan through the Exchanges, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

The DOL has created two model notices that, if used, will ensure compliance with the ACA notice requirement: one model for employers who do not offer a health plan and another model for employers who offer a health plan to some or all employees.  It should be noted that the model notices include more information than the three points above and are not required. Employers are permitted to create their own notices so long as they contain the required information listed above and are timely distributed to employees.

The model notices can be found here:

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

DOL guidance on the ACA notice requirement is here: http://www.dol.gov/ebsa/newsroom/tr13-02.html#footnotes

Employers are encouraged to contact employment counsel with any questions about the notice or FLSA coverage, or for assistance drafting a custom notice in compliance with the new law.

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Author: Elizabeth Sigler

Elizabeth Sigler is an Associate with Stanton Law LLC. She attended the University of North Carolina at Chapel Hill as a Davie Scholar, where she earned her Bachelors of Arts degree in Political Science and Spanish. Her studies at UNC included a semester at the University of Havana in Havana, Cuba. She is also a graduate of Georgia State University College of Law, where she served as Articles Editor of the Georgia State University Law Review. While in law school Elizabeth clerked at both the U.S. Department of Labor Office of the Solicitor and the Equal Employment Opportunity Commission Hearings Unit, where she researched and analyzed a wide variety of federal employment issues. Elizabeth focuses her practice on all aspects of the employer-employee relationship, including representing and advising employers in claims involving hiring, wage, and leave disputes; discrimination; harassment; retaliation; and occupational safety and health. View all posts by Elizabeth Sigler →

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