Final regulations were issued by the Department of Labor (“DOL”) on October 12, 2016 (“Final Rules”) governing employee retaliation protections under the Patient Protection and Affordable Care Act of 2010, as amended (the “ACA”). Although the Final Rules are substantially unchanged from the interim final rule issued by the DOL back in February 2013 (the “Interim Final Rule”), employers should be aware that the Final Rules include several clarifications which serve to expand the scope of the ACA’s retaliation protections.
Protections from Retaliation for Seeking Subsidized ACA Exchange-Based Coverage
Under the ACA’s employer “pay or play” mandate, an applicable large employer (an “ALE”) is subject to a penalty under Section 4980H of the Internal Revenue Code of 1986, as amended (the “Code”), if a full-time employee of such ALE purchases coverage from a public ACA health insurance exchange (an “Exchange”) and receives a premium tax credit or a cost-sharing reduction (i.e., a subsidy) in connection with such coverage. Because the amount of an ALE’s potential “pay or play” penalty directly correlates to the number of such ALE’s employees who receive subsidized coverage on an Exchange, Section 1558 of the ACA added Section 18C of the Fair Labor Standards Act (“FLSA”) to protect employees from retaliation for seeking financial assistance in connection with their Exchange coverage.
INSIGHT. The Final Rules state that the types of “retaliation” prohibited under the ACA’s retaliation protections include not only discharging or firing an employee, but also intimidating, threatening, restraining, coercing, blacklisting or disciplining, an employee with respect to the employee’s compensation, terms, conditions, or privileges of employment because the employee (or an individual acting at the request of the employee) has engaged in any activity covered by the ACA’s retaliation protections.
As amended by Section 1558 of the ACA, Section 18C of the FLSA prohibits employers from retaliating against an employee because they know or suspect the employee has “received” a tax credit or cost-sharing reduction for coverage on an Exchange. The Final Rules, issued by the DOL’s Occupational Safety and Health Administration (“OSHA”), which enforces whistleblower protections under many federal laws, expand the scope of the protections set forth in the Interim Final Rule, by clarifying that an employee has “received” a premium tax credit or cost-sharing reduction not only when a premium tax credit is allowed on the individual’s tax return, but also when an Exchange finds the employee eligible for a premium tax credit or for a cost-sharing reduction.
INSIGHT. An Exchange’s determination as to whether an employee is eligible for a premium tax credit or a cost-sharing reduction generally takes place when the employee first applies for coverage on the Exchange, and as such, could occur many months before the Exchange sends the employer a Section 1411 Exchange Notice (i.e., the notice informing an employer that an employee is receiving subsidized coverage on the Exchange).
Protections from Retaliation for Whistleblowing
In addition to the premium tax credit and cost-sharing reduction protections, Section 18C of the FLSA also protects employees from retaliation because they:
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Provided, or are about to provide, information to their employer, the federal government, or a state attorney general relating to a violation of, or an act or omission that the employee reasonably believes is a violation of, any provision of Title I of the ACA;
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Testified, or are about to testify, in a proceeding about a violation of, any provision of Title I of the ACA;
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Assisted or participated, or are about to assist or participate, in a proceeding about a violation of any provision of Title I of the ACA; or
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Objected to or refused to participate in any activity, policy, practice, or assigned task that the employee reasonably believed was a violation of any provision of Title I of the ACA, or any order, rule, regulation, standard, or ban under Title I.
INSIGHT. Title I of the ACA includes a range of health insurance market reforms that apply to almost all employer-sponsored group health plans, such as the prohibition on lifetime and annual dollar limits on “essential health benefits,” the requirement for non-“grandfathered” plans to cover certain recommended preventive cost services with no cost sharing, and the prohibition on pre-existing condition exclusions.
The Final Rules’ Clarifications and Expansions of the Retaliation Protections
The Final Rules clarify that for purposes of the ACA’s retaliation protections, the term “employee” includes both former employees and job applicants. The Preamble to the Final Regulations states that the plain language of the statute “makes clear that the parties need not have a current employment relationship.”
Some commenters to the Interim Final Rules had expressed the view that the ACA’s retaliation protections should be extended to employees who take preliminary steps, such as gathering information, that are needed to apply for health insurance coverage on an Exchange and to apply for a premium tax credit, citing a particular concern about protecting employees who ask their employers about the health care coverage offered by their employers, in connection with that information-gathering process. Although the Final Rules do not expand the text of the Interim Final Rule to include specific protection of such actions (since the Interim Final Rule generally mirrored the statutory language of the ACA’s retaliation protections), OSHA noted in the Preamble to the Final Rules that OSHA agreed with the commenters’ concerns, and noted that OSHA believes that an employee’s inquiry to an employer to gather information needed to apply for advance payment of the credit for exchange coverage would trigger the ACA’s retaliation protections if the employee can show that the employer’s belief that the employee received a premium tax credit (or the employer’s desire to prevent the employee from taking further action to obtain the credit) contributed to the employer’s action against the employee.
The Final Rules also clarify that while the ACA does allow an ALE to reduce an employee’s hours in order to avoid (or minimize) its “pay or play” penalties, taking such an action because the ALE knows or suspects that an employee is receiving a premium tax credit or a cost-sharing reduction for coverage on an Exchange would likely be illegal retaliation. Threatening to reduce an employee’s hours or take other adverse action to deter an employee from applying for Exchange subsidies is also prohibited by the Final Rules.
Complaint Procedures
Employees experiencing possible ACA retaliation can make a complaint with OSHA. Complaints may be written or oral, may be made in any language, and need not be in any particular form; however, OSHA has made an online complaint form available on its website (available here) which workers may use to electronically file retaliation complaints for any of the federal statutes OSHA administers, including the ACA’s retaliation protections. Complaints must be filed within 180 days of the alleged violation, and employers have 20 days to respond after receiving OSHA notice of the complaint. OSHA issues its findings within 60 days of receiving the complaint. If OSHA determines a violation has occurred, it may order appropriate remedies, including reinstatement, back pay, compensatory damages, and attorney’s fees. The Final Rules include procedures for administrative appeals and judicial review of OSHA’s findings.
Takeaways for Employers
The issuance of these Final Rules highlights just how important it is for employers to take steps to avoid even a “whiff of impropriety” in taking almost any employment action—from interviewing and hiring, to ongoing supervision, to termination--which could be construed as retaliation in violation of the ACA’s retaliation protections. This is especially true right now, as employers are just beginning to receive Section 1411 Exchange Notices from various federal and state Exchanges, notifying them of their employees’ receipt of subsidized coverage on such Exchanges. Further, employers will want to note the expanded scope of the ACA’s retaliation protections under the Final Rules, which may be triggered at earlier points in the employment relationship (or, under OSHA’s interpretation, before the employment relationship even begins).
To the extent employers have not already done so, they may want to consider taking certain proactive steps, such as updating existing anti-retaliation policies to incorporate the ACA’s retaliation protections, in addition to providing training to applicable staff. Affirmative statements could be included in internal policies and handbooks that exercising the ACA’s retaliation protections will not be used as a basis for any employment-related action. In addition, employers may want to consider the feasibility of creating a “firewall” between employees who are authorized to access information relating to whether an employee is eligible to receive subsidized coverage on an Exchange, on the one hand, and employees who customarily make employee disciplinary and termination decisions, on the other.
Please feel free to contact the author of this article or your preferred King & Spalding attorney to discuss these issues in greater detail.
