The Affordable Care Act requires employers subject to the Fair Labor Standards Act (FLSA) to notify employees of the coverage options available through state insurance exchanges, such as Covered California. Notice must be delivered to all employees hired before October 1, 2013 no later than October 1, 2013. All employees hired on or after October 1, 2013 must be notified at the time of hire.

Although the U.S. Department of Labor recently released guidance indicating that there are no fines or penalties for failing to provide the notice, we strongly recommend that employers provide the notice. While employers will not be penalized under the FLSA for failing to provide the notice, employers that do not provide the notice may be subject to possible employee claims under other provisions of applicable law.

As discussed in our previous legal alert, the Affordable Care Act added Section 18B to the FLSA and requires that employers provide employees a notice of the state insurance exchanges containing certain required information. In May, the Department of Labor released two model notices – one for employers who offer health coverage and one for employers who do not offer health coverage – which employers may use to provide notice to employees. A customized notice may be used, but employers must ensure that all requirements of Section 18B of the FLSA are met. The notices may be distributed to employees via first class mail, or electronically if certain regulatory requirements are met.