Under the Affordable Care Act, employers subject to the Fair Labor Standards Act must provide a “Notice of Coverage Options” to each employee. The purpose of this Notice is to inform employees that they may obtain health insurance through their states’ Health Insurance Marketplace. For current employees, the Notice must be distributed before October 1, 2013. For new employees, the Notice must be given within 14 days after work begins.

Employers Subject to the Notice Requirement

To determine whether your entity is subject to the FLSA, guidance can be found using the Department of Labor Wage-and-Hour Division’s FLSA compliance tool. In general, the FLSA applies to employers that have sales or receipts of $500,000 or more, and that employ one or more employees who are engaged in, or produce goods for, interstate commerce.

Content of the Notice

On May 8, 2013, the Department of Labor (“DOL”) published “temporary guidance” (see Technical Release 2013-02) regarding the content requirements of the Notice. The Notice must inform each employee:

  • about the existence of the Marketplace, including a description of the services provided by the Marketplace and how to contact the Marketplace for assistance;
  • that he or she may be eligible for a premium tax credit or cost-sharing reductions for health coverage purchased through the Marketplace if his or her employer does not offer a health plan that satisfies certain standards under the Affordable Care Act; and
  • that if the employee purchases a health plan through the Marketplace in lieu of employer-provided coverage, he or she may lose his or her right to employer contributions (if any) for employer-provided health coverage, and any favorable tax treatment that applies to employer contributions for health coverage.

The DOL also provides a model Notice for employers who offer a health plan to some or all of their employees and one for employers who do not offer a health plan. Employers may issue a modified version of the DOL Notice to their employees as long as it otherwise meets the content requirements listed above.

Form and Manner of Delivery

The Notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail, or alternatively, electronically if the requirements of the Department’s electronic disclosure safe harbor are met. The Notice must be provided automatically and free of charge.