The Department of Labor (Department) recently released its 2019 inflation-adjusted penalties for benefits-related violations. Legislation adopted in 2015 requires adjustments to specific Department civil monetary penalties by January 15 of each year. Due to the government shutdown this year, the penalties were released a bit late, but are effective as of January 23, 2019. Note that these rates are for penalties assessed after January 23, 2019 with respect to violations committed after November 2, 2015, when the inflation adjustment was approved. The cost-of-living adjustment is based on the Consumer Price Index for all Urban Consumers, which resulted in roughly a 2.5% increase.
The employee benefits related penalties are as follows:
- Failure to timely file a Form 5500 - $2,194/day (up from $2,140/day in 2018)
- Failure to furnish plan-related information as requested - $156/day, not to exceed $1,566 per request (up from $152/day, not to exceed $1,527 per request in 2018)
- Failure to furnish certain reports (such as benefit statements) or to maintain records - $30/failure (up from $29/failure in 2018)
- Failure to provide blackout notice or notice of right to divest of employer securities - $139/day (up from $136/day in 2018)
- Failure to provide participants notice of certain funding deficiencies or notice of automatic contributions to plans - $1,736/day (up from $1,693/day in 2018)
- Prohibited distributions when a pension plan has a liquidity shortfall - $16,915/distribution (up from $16,499/distribution in 2018)
Group Health Plans
- Failure to timely provide summary of benefits and coverage (SBC) - $1,156/failure (up from $1,128/failure in 2018)
- GINA violations - $117/participant/day (up from $114/participant/day in 2018)
- Failure to provide Medicaid and CHIP disclosures - $117/participant/day (up from $114/participant/day in 2018)
Multiple Employer Welfare Arrangement (MEWA)
- Failure to timely file annual report (Form M-1) - $1,597/day (up from $1,558/day in 2018)
Note that in most cases these penalty amounts are the most that the Department may charge for a violation. We have been successful in negotiating lower penalties for clients based upon the particular circumstances that led to the violation.