No Penalty for Failure to Provide Exchange Notice

No Penalty for Failure to Provide Exchange Notice

Many employers are reconsidering whether they will send the Exchange Notice because there are no penalties in connection with a failure or refusal to provide the notice.

In a brief Frequently Asked Question document (link provided below) issued on September 11, the Department of Labor formally clarified that an employer covered by the Fair Labor Standards Act will not be subject to a fine or penalty under the Patient Protection and Affordable Care Act if they fail to provide the Exchange Notification by October 1, 2013.

Health Reform amended the Fair Labor Standards Act to require employers to provide each employee with a written notice containing information about the exchange. The Federal Government has provided a model notice. This new guidance, however, makes clear that the requirement is not enforceable through a penalty or fine, although it suggests that employers “should” provide the written notice. Here is the actual guidance:

Can an employer be fined for failing to provide employees with notice about the Affordable Care Act’s new Health Insurance Marketplace?

No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.

As a result a number of employers have already decided not to send the Exchange notice. We cannot provide you a legal opinion on this issue, but if you are considering not sending the Notice in light of this news, we would be happy to discuss the implications of this new guidance with you and legal counsel.